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CreditAccess Grameen Ltd
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Ladies and gentlemen, good day, and welcome to CreditAccess Grameen Q1 FY'24 Earnings Conference Call, hosted by Equirus Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Shreepal Doshi. Thank you, and over to you, sir.
Thank you Seema. Good evening, everyone. I welcome you all to the earnings conference call of CreditAccess Grameen to discuss the Q1 FY'24 performance of the company, industry trends and business update. We have the management team of CreditAccess Grameen with us represented Mr. Udaya Kumar Hebbar, who is Grameen's Managing Director and CEO; Mr. Ganesh Narayanan, CEO and Chief Business Officer; Mr. Balakrishna Kamath, CFO; and Mr. Nilesh Dalvi, who is Head of Investor Relations.
I would now like to hand over the call to Udaya sir his interim comments, after which, we can open the floor for question and answer. Over to you, sir.
Thank you, Shreepal. Good evening to everyone. We thank you all for joining this conference call to discuss our first quarter FY'24 financial performance. Before we commence the discussion on Q1 FY'24 results, I take pride in informing you all that we have entered the 25th year of our operations, playing an instrument role in expanding financial inclusion across the long-term [indiscernible] of our country. Our strong fundamentals, work ethic, customer-centric business model and employee-centric operating model have helped us to remain socially relevant and become the preferred financial partner to a large number of low-income households across rural India.
While our aim is to soon surpass INR 25,000 crores on during the 25th year of our operations, the next 4, 5 years plan is to see us doubling our loan portfolio to over INR 50,000 crores by leveraging our solid foundation and leadership position in the microfinance industry. Talking briefly about the first quarter, we witnessed strong business momentum led by growth in our customer base.
We added 3.28 lakh customers, of which 47% came from outside of the top 3 states. Our customer base grew 19.9% Y-o-Y and 3.7% Q-o-Q to INR 44.2 lakhs. Our AUM grew 39.7% Y-o-Y and 3.7% Q-o-Q to INR 21,814 crores, while the disbursements grew by 122.3% Y-o-Y to INR 4,771 crores.
Our footprint expanded with 40 new branches taking the total branch network to 1,826 branches across 353 districts. Our interest income grew by 50.1% Y-o-Y and 14.6% Q-o-Q largely driven by robust loan portfolio growth in the fourth quarter and the benefit of loan repricing over the past 12 months. Our average and marginal cost of borrowing for Q1 FY'24 stood at 9.6% and 9.1%, respectively.
Since our cost of borrowing largely remained stable during the quarter, our NIM expanded to 13%. However, we expect some increase in the cost of borrowing over the coming quarters as we work towards increasing the share of long-term borrowings.
The USD 100 million drawdown under [social ] loan facility happened in the last week of June. Hence, it did not impact the cost of borrowing in the first quarter. We should see its impact in the second quarter. Further, we shall complete the drawdown of the remaining $100 million under the social loan facility in the [ second ] quarter. Also, we have to work towards raising the second tranche of public NCD before November '22.
These drawdowns would result in 20 to 40 bps increase in our cost of borrowing for the coming 2 quarters. However, on the lending side, we should also cognizant of the fact that 16% of our loan portfolio, which is [indiscernible] up in '22 [indiscernible], is yet to be replaced and should provide some cushion against the [indiscernible] average cost of borrowings.
Hence, as of now, we retain our guidance of 12% to 12.2% NIM the financial year. Our maiden USD 200 million syndicated loan facility marked the first sub transaction in the NBFC MFI industry and [ 4 dealer ] countries. This has helped us to broaden our lender base to over 70 lenders with many banks from Taiwan and Middle East taking made an exposure to the Indian microfinance industry through this transaction.
This also resulted in increasing our share of foreign borrowings to 19% at the end of June '23 compared to 7% in the last quarter. Our liability strategy, which is most essential for keeping the growth engine well in place, playing really well with 39% of our total drawdowns in Q1 FY'24 coming from foreign sources and undrawn sanctions in hand also having 27% from foreign sources.
This will further diversify our liability profile, increase the share of long-term and stable funds and enhance the positive ALM mismatch as per our plan. We continue to pursue our plan on diversification as we grow larger. Our operating profitability significantly improved in the first quarter with a net interest income growing by 65.4% Y-o-Y to INR 763 crores the cost-to-income ratio declining from 39.7% in Q1 FY'23 to 30.8%.
We expect cost to income ratio to moderately increase in the coming quarters and shall remain within the guidance range as we invest in the branch expansion and technology initiatives and [indiscernible] for building manpower for growth and [indiscernible] in the coming quarters.
PPOP grew at a healthy pace of 87.7% Y-o-Y to INR 544 crores. The credit cost in Q1 FY'24 stood at INR 76 crores, including INR 7.8 crores management overlay on the legacy book of MMFL, which was only INR 72 crores or 0.3% of the total loan portfolio. The credit cost plus partially offset by INR 12 crores of bad debt recovery, resulting in net credit cost of 0.3% in Q1 FY'24.
Our collection efficiency, excluding arrears, stood at 98.7% at the end of the first quarter. GNPA measured at 60+ dpd reduced further to 0.89% at the end of June '23 compared to 1.21% in the last quarter, while net NPA stood at only 0.27%, signifying the best in class of asset quality. Our PAR 90 plus stood at only 0.7%.
PAT grew 151.5% Y-o-Y and 17.5% Q-o-Q to INR 348 crores during Q1 FY'24, marking the highest ever profitability in the first quarter. This resulted in ROE of 5.8% and ROE of 26.4%. The capital adequacy ratio remained comfortable at 24.4% at the end of Q1 FY '21. The strong outperformance during Q1 FY'24, versus our guidance was primarily due to robust customer and portfolio growth. While we do anticipate borrowing and operating cost to moderately increase for the coming quarters, we believe that the benefit of strong portfolio growth in the first quarter will continue to accrue in from higher interest income over coming quarters. Hence, we shall continue to monitor our performance and reevaluate our annual guidance after 2 quarters.
Before I hand over the forum for question on the session, I would like to quickly touch upon the successful promoter stake sale, compressing 90 lakh shares or 5.7% share which was consummated on 30th June 2023. As informed earlier, in our various communications, this transaction has helped us to further expand our shareholder base and increase the free float in our stock.
Both this transaction and the issuance of shares [indiscernible] shareholders as per the share stock arrangement post merger, the promoter holding now stands at [ 66.77% ] as on June 30, 2023. The institutional investor holding has increased from 21.95% in March '23 to 27.12% in June 2023. The transaction received strong interest from both existing as well as new investors.
As indicated earlier, this measure was facilitated by our promoter for broadening our shareholding base as well as say, [ free float ] and we have largely achieved our objective quite successfully. The special capital from CreditAccess India B.V. and their firm support will continue to help us channel it for energy. That was fulfilling the growing business potential as presented during our Analyst Day on May 18, 2023, and more talk to [ joint invest ] conference.
Lastly, I would like to congratulate Ganesh Narayanan for being elevated as Chief Executive Officer effective from 1st August 2023 subject to shareholder approval in the upcoming AGM. Consequently, I shall continue to lead as Managing Director. Thank you for your patient listening. We may now open the forum for the question-and-answer session.
[Operator Instructions] We take the first question from the line of Mr. Nikhil Rungta with Nippon India Mutual Funds.
First of all, congratulations on a great set of numbers. And also congratulations to the new MD, Mr. Ganesh. Sir, just a couple of questions from my side. To start with First of all, this is one of those seasonal quarters wherein we see the weakest quarter for our company in general on an annualized basis. But this time, we have gone against the trend. So do you see this as structural that all the 4 quarters would remain at a strong quarter? Or is it just one-off in terms of [indiscernible]
First, I want to correct you that Ganesh elevated as Chief Executive Officer, and I'll continue to be remaining as Managing Director.
Sure, sure, yes.
Just to correct. Maybe there is a confusion. Okay. So I think it's super to be big quarter even last year, but for -- we took a decision to implement regulatory changes. Otherwise, from [indiscernible] we grown well. Last year also -- if you remember Q2 last year, we did extraordinarily well, and we are like continuously doing well.
But in any case, in the first half, normally in this business, performance is about 40% of the annual growth. So 60% normally goes to the second quarter. So our sense is that it will be a continuous strong performance going forward because we have built everything or every pillar of the organization is in place, every pillar of very organization is in place. Therefore, we believe we will be able to perform quite well in all quarters.
Okay. Since we have grown at 40% in terms of AUM, but you have maintained your guidance of 24% to 25%. Do you think there is a significant upside risk to our guidance, both in terms of AUM growth or margins or ROA or ROE, anything? I mean because if I compare or collate this with my first question, than 1Q being the weakest quarter for the year, the guidance should have upside risk. So do you believe that will be a possibility?
So actually, as I said in the initial remarks, so the customer acquisition improvement after disbursement picked up, which has contributed for the better performance this quarter. And that benefit will keep occurring for the entire year. But still we would review after Q2 or Q3 to revaluate our guidance.
Okay. Okay. And sir, last question from my side. How much yield repricing is still pending in our AUM as of now? I believe you touched upon this in your opening remarks, but things were not clear. So just wanted to clarify on that.
Yes, yes. About 16% of the portfolio yet to be reprice. Therefore, that's what exactly we said. Though there is a potential increase in -- some increase in cost of borrowing, but there is a repricing also there for about [ 16% ] portfolio, so which should take care of that cushion, so some cushion is available, but there will be still we need to watch for next 2 quarters to evaluate our overall guidance.
We'll take the next question from the line of Mr. Sumit Rathi, Centrum PMS.
Congratulations on the great set of numbers, sir. So my first question is the qualitative side, how are we seeing Bihar and Uttar Pradesh and other geographies and the other newly added geographies where we are heading on our branches incrementally, how have you been experiencing things so far, sir?
So our experience in all the shares, particularly Bihar, UP, Odisha, Jharkhand, all are quite good, and we are not seeing what do you call any weak or difficulty in any geography there. All are performing very, very well.
Great. Another thing, sir, on our GLP per branch is around INR 12 crores and our GLP per loan officer is around INR 1.8 cr. So where do you see in a steady-state business, the saturation point to come which make you decide to open a new branch or add an incremental employ? And also, if you can add our branch covers what kind of catchment area on a steady state for us?
So branch, when we start over a period of time, it grows. So what we decided is once branch, once crossed about 7,000 customers, so we actually do one more branch and shift the portfolio to the other branch so that both can go together. So load management, we manage in such a way. But as loan officer is outcome of how many customer he handles and the number of centers what he is handling is the outcome of how many customers we handle actually.
So therefore, we limit that loan officer to handle not more than 5 to 6 centers, so that we can manage the relationship well rather than just disbursing money. So which is actually how -- it's the number of centers are 5 to 6, the maximum portfolio he may handle between INR 1.8 crores to INR 2.2 crores depends on the geography and depending on the vintage of the customers as well.
Great, sir. Sir, on our new types of loans which we have come up and envisage the idea about that in our recent meet also. How are we seeing the progress over there? On the ground...
Yes, it's a quite good pilot. We actually publicize that two of the pilots are -- I mean will continue. And the three of them will start scaling up, particularly in digital business loans, the individual -- sorry, [indiscernible] the 2-wheeler will scale up and [ gold ] loan will continue to be pilot to be in order to test more, whereas affordable homes, we had to start the pilot this year.
So all are giving very good results so far. So -- but we are continuing to scale it up and then test more. I think at this point of time, it is only about 1% of the business. So as we grow, we'll start publishing a number also.
That's great. And one last question. On cost-to-income ratio this quarter would have been probably one of the best quarters at 30 percentage. So -- how do we envisage this on a steady state basis? Is it like 34% to 35%? Or it can be below 34 and slightly up 30? Where do you see it going given that great momentum and business pickup has been observed?
So what we get is 34% and 35%, 34% to 35%. That's a -- we reevaluate to, right now, we are reconfirming our ability to meet the guidance. And maybe after next 1 or 2 quarters, we will reevaluate and come back if there is a change in our guidance in all the 4 parameters what we guided to you.
[Operator Instructions] We take the next question from the line of Mr. Renish from ICICI.
Congrats on a great set of numbers and congrats to Ganesh for a new role. Sir, just two questions again, sorry to circling back to the cost part. So if you look at this quarter, there is no one-off income. And at the same time, there is no one-off expense as well. So I mean, is it fair to assume that this 31% cost to income is the new normal given maybe we are now actually benefiting out of the scale and we might not get back to those 34%, 35% cost to income. I mean what is your internal assessment on this, sir?
Difficult to assume with 1 quarter change, Renish. So that's why we said that we will watch for 1 or 2 more quarters to review and come back because as I explained in the initial remarks that there are certain costs might come in the Q2 as we grow, we have to open more branches. We are actually adding more manpower for control and growth. So there are some quarters become upfront, right? So therefore, it is difficult to assume right now. So we need to watch for stable one more quarter to tell you on this.
Okay. But, but let's say, we are not going back to, let's say, to 30%, 40% cost to income, which we used to have like same FY '18, '19.
But any case, we have guided that 34%, 35% that we -- that we are ensuring that we will be able to reach there. So if it is more -- it's improving there probably will come back after sometime.
And sir, my second question is slightly at the maybe industry level or sightly a longer term. So let's say, since FY '23, we -- I mean, the sector or industry has been going through one of the best cycle and has been growing almost 20%, 25% industry level, of course, good players like you are growing a bit faster.
But historically, we have seen whenever the industry has seen this kind of a growth for 2, 3 years, there is a tendency of any state or any pocket sort of derail the momentum. So internally, sir, what kind of early warning signal you guys try to preem the business cycle? It could be, let's say, a center of excellence or anything?
I think in the analyst meet, we have definitely clearly told about how our control systems and how our risk management is ably controlling the growth as well as [indiscernible]. So we have put a strong multisystem, multiple defense system. I think three different systems we mentioned about our while before acquiring client and then after lending to them.
So I think these are all very important and top of that, creating the loyalty, high touch. So all these are very important to work in the bad time, even if something goes wrong, thanks to -- I don't think it is only for microfinance or industry, you can find some time of lift sometime.
But keeping the customers in touch, keeping the employing high motivated, and try to enhance our ability to get the data in terms of the risk, having the dashboard, having the monitoring system using the as much system and data and analytics, all these are keep improving it. I think at least based on the past history, we are able to perform better in a same what you described. So I think you can hope that we will be definitely doing better even in future if the such circumstances comes in front of us.
Got it, sir. And just last data keeping question. So of the total customer base, sir, what percentage of customer base will have more than INR 1 lakh outstanding at the industry level?
Industry level, I don't think we have data as of today. I think as of March -- around 7.5% or 8% as of March, I believe -- I don't have -- right now, I am sorry. Maybe [indiscernible] will take together from micrometer and let you know offline.
Sorry, sorry, let me rephrase it. Let's say, what percentage of our customer base will have total outstanding of INR lakh like, including other lenders?
Right now in front of the more than 50,000 about 43%, but average is about 63,000 for the customers. We did more than 6 years only those guys will be able to get more than INR 1 lakh, but the average is of 63,000. And in our case, that's something different you need to look at. So as we explained earlier also, any customer with vintage more than 4 years have a very less risk in our case.
We even placed them 1% lower than others. So in any customer, if we have more than INR 1 lakh, it's always more than 4 years figures. So that kind of profile we have, the vintage profile, which have a very, very big deterrent for us in terms of credit risk actually. So that's a credit risk.
We take the next question from the line of Shweta Daptardar Elara Capital.
Congratulations on great set of numbers. Sir, a couple of questions. One is, if you look at the current quarter, then there is marginal drop in the IGL loans and [indiscernible] rise in home improvement and retail finance loans. And also, if you look at the industry level, the individual loans have been on the rise. So how do you perceive this from the risk parameter matrix going forward?
No, I think it is not a big number because overall number in the non microfinance is just 1% or less actually. It may be very, very, very small variation to see though. I don't think it's any significant what you call or you say we cannot make out anything out of that right now because of the 4 small portfolio in the non microfinance book. So it's just pilot and growing book.
Okay. I will rephrase it in a different manner. So we have also alluded to the fact that individual loans will be slightly increasing in the portfolio. Sir, whether these individual loans are largely cross-sold or graduated from the existing customers or these will be coming from the newer portfolios and newer credit customer base?
Yes, Ganesh?
Okay. So these individual unsecured loans, as we had guided earlier, even in the medium term, should hover in the range of 5% to 7% of our portfolio and these are pre-selected graduated customers with certain credit behavior with us and certain vintage and certain type of profile that is chosen after assessment. So that is definitely a graduated book, and we believe this would also behave well as we move forward.
Yes. For your question about is there a new question, it's completely existing retained customer, Shweta.
Okay. Okay. Noted, sir. Sir, second question, if I look at the borrower mix, so clearly, the borrower share from the [indiscernible] of markets and the markets where we had a key presence where we have presence, this is continuously falling.
So what is the kind of growth that we are seeing in the top 4 states of Karnataka and Maharashtra, TN and MP, and what would that be in comparison with other few markets which are going for you? So is Karnataka and Maharashtra growth now in single digits? And how are you perceiving penetration and growth in the existing [indiscernible] of markets?
So based on the base and the vintage of the Karnataka, Maharashtra, Tamil Nadu, we believe that this growth will be either the single digit or up low double-digit growth, whereas overall, we already said that we will grow between 24% to 25%, which means northern geography, which is noncore market, will grow faster. So we are witnessing that growth already. That is why that particular data about the new customer of 47% are coming from different geography than the top 3 states, which is good as a diversification point of view.
We take the next question from the line of Mr. Abhishek from HSBC.
Many congratulations for the quarter. And congratulations to Ganesh for the new role as well. So one question, sorry to sort of get back to the yield and cost question. So you said that there's about 16% of the book, which is pre-April '22, there would be some more part of the book, which would be first half last year, which was also at a lower yield. So cumulatively, how much yield benefit are you looking at from this repricing and over what period?
See, the 12% -- the 16% is pre-April [ which was a ] Pre-regulation portfolio. The [indiscernible] portfolio, there is not much change actually basically after February 16 -- February '23, we have not changed the price. So therefore, majority of portfolio will not have too many -- too much of repricing actually. Repricing benefit will get only 16%. And the additional will get little insignificant, not doing significant.
But do they -- the 1Q '23, 2Q '23, if I look at your presentation, it give numbers of 20.3% and 20.8% at a disbursement rate.
That's correct. I got your point, but this will take a longer time. This will take a longer time because this will not get into immediate repricing actually because of long-term loans. So we are not repricing that unless they are maturing and pre-lending, right? You will not get the benefit and that's why, that is why I'm telling that benefit that there is not significant for yield point of view. Yes, it's not repricing based on floating rate. These are all fixed rate.
Fixed rate, yes, yes. So basically...
And then 90% of our loans, 90% of loans are more than 2 years. That's why.
Right, right. So incrementally, maybe 20, 30 basis points is the max we could get out of, this is on a blended basis.
But that also, it takes longer time. I think this 15% will not yield -- will yield about 25, 30 bps. Correct, you're right. So that is why we said, our cost of borrowing might go up between 20 to 40 bps. So [indiscernible] of the repricing, which would take care.
Got it. And regarding costs, you also -- you explained that some drawdown was left and you're borrowing long term. Can you give a little more detail about what exactly will lead to this 20 to 40? Sorry, it couldn't follow in the opening comments.
See, see [indiscernible] we have announced that we have borrowed almost 39% of our borrowing in Q1 from foreign sources -- which have a higher cost compared to domestic borrowing, but whereas the actual borrowing happen only at the end of the quarter. The real impact of that borrowing will, will come in the Q2.
And on top of that, we are also estimating to borrow some more international borrowing, which in pipeline, which is already committed, plus we would raise NCD also. The real will have a higher cost compared to the other borrowing costs. Therefore, it might be impacting about 20 to 40 bps of the quarter's borrowing. Hope I clarified.
Right, right. And the landed cost of this foreign borrowing would be how much post-hedging?
Between about -- between 9.5% to 10% depends on the country and geography and the type of lender. Some of them actually close to 10 actually.
If I put these two things together Udaya, so incrementally, maybe 20, 25, 30 bps of yield increase and add the most 20 to 40 bps of cost increase. So broadly, your NIM should be stable, maybe plus, minus 10, 15 bps, but you're still maintaining a 12 to 12.2 NIM guidance. So don't you think -- I mean, what is going to bring it down?
You need to look at the one more, two more quarters because there is a base effect, there is a capital adequacy effect, multiple things we need to see. We'll not be able to take a decision is on 1 quarter result, Abhishek. That's what we said. We will take a decision after some 1 or 2 quarters based on the actual -- how it moves in the next 2 quarters -- one or two quarters.
[Operator Instructions] Next question is from the line of Mr. Abhijit Kejriwal from Motilal Oswal.
First of all, congratulations to your team on a good quarter. And congratulations [indiscernible] and very, very good to see this appointment of this elevation to the CEO role comes through. Sir, I don't have any questions on this quarter. But -- what I really wanted to understand is given that we now have state elections coming up later in this calendar year, and then next year -- when we are heading into general addictions.
Obviously, that noise around elections, potential of any known waiver announcements, right, might come into the picture [indiscernible] these are merit based in the coming quarters. I mean, will it be wrong to feel that given that loan waivers and they were announced in [ Assam ] and subsequently, I remember advertorials from that -- government requesting citizens that if their people kind of take those or offer those schemes or take those loan labels.
And given that with the recent announcement that we had from the court, meaning [indiscernible], more then we wrong to assume that at least the magnitude and frequency of , I mean, such loan waivers from political parties. Will I mean at least decline moving forward, if [indiscernible] cannot rule out that as a risk going forward?
I think, Abhijit, we are on the same page, what we're describing. That's a good thing even in the last I mean a decade or so, elections never impacted the microfinance significantly anywhere. Yes, there are even the -- even earlier the Madhya Pradesh government or Karnataka government or Chhattisgarh went and all the loan waiver -- but the customers, by and large know that their loans are not getting waived. And also, there's a significant awareness in the political side about the capital creation with microfinance not bringing at the rural but normally, government cannot do themself directly.
So therefore, with a great support from every side whether it's [indiscernible] There's a finance minister or the regulator or the [ BFS ] and you can see all the said, there's a lot of support for microfinance. They would call us for the positions when the finance believes worked. So the way the government supported while there was COVID, the liquidity, the moratorium are many things that supported to the sector to ensure that the sector should grow or sector to stabilize. And even, even in the case of COVID, that the 2 years end up great grow, and we say politicals -- politicians want to create any problem where we did not see any issues anywhere in the country.
So some is a different issue, which can be discussed separately because it's not outcome of any election, which is the outcome of many different events or 3 to 4 years, including COVID, [indiscernible] protest, student agitation and the election on a government announcement for events in the 3, 4 years' time, basically to solve the issue of microfinance, they had to come up with this solution, so which is actually solved, which advocate, example of how government and the institutions together can resolve the issue.
So looking at all these things in the last 3, 4 years, I think there's lesser impacts because of the election or such, such events. There's a great support from entire system in everywhere. So we don't see any -- we don't expect any issues in an election [indiscernible] every 5 years, they will say as election. Every year, there will be a multiple state elections, and we have been dealing with that carefully. So maybe during election period, 1 or 2 months, there may be I mean, muted growth because of the regulations around. But for that, we don't see any significant impact because of these elections around.
The next question from the line of Mr. Sameer Bhise from JM Financial.
Congrats on a strong set of numbers. Congrats to Ganesh as well. Just a quick question, Udaya, on some thoughts on creating management overlay as we continue to navigate the good period in the sector, some thoughts would be helpful.
So Sameer, if you look at our way of ECL, there's a huge part of it very significant [indiscernible] early, if you say it's not there because if you look at our GNPA is about 0.1% developed, provisioning is about 1.59%. At the 90 days basis, which means that we compare to [indiscernible] so there's a huge over already there.
And again, we recognize the stage 2 at [indiscernible] which means any event we are already there, recognizing the requirement and we recognize as stage 3. So therefore, there's an inbuilt layer and there is no such accounting principle allows us to create additional overlay when there is no, what you call, specific events around us.
So therefore, I think there's sufficient overlays in built. And then we always have particular habit of early recognizing the risks with which have been observed all over the last couple of years. So I think we have sufficient cushion for -- instead of any specific overlay here.
Fair enough. So it's okay to assume that the credit cost run rate could be around the current levels. Is that a fair conclusion?
Excuse me, can you repeat please Sameer, sorry.
Is it fair to assume that credit cost run rate will be around current levels?
It should be because we guided the credit cost between 1.6% to 1.8%. If you look at the current change, definitely, it's in that range. I think we will be able to meet that guidance.
We take the next question from the line of Mr. Nidhesh from Investec.
Sir, what are the plans to scale our operations in AP and Telangana, these 2 states which have opened up? Have we started opening branches there already?
So we would want to watch a bit there in both states because administratively, we need to see the alignment of the administration on microfinance because for at least 10, 11 years, the administration of 2 to not to accept the microfinance there. Therefore, we are watching that. Maybe we will -- we'll be opening few branches and test it how it works. And then take the expansion later actually. So we have not been hurry to go and start operations in [indiscernible]. We will be watchful there.
Sure, sir. And secondly, how is the asset quality experience in the individual unsecured loans that we are scaling in the group format?
It's [indiscernible] great. So it is within our expectation and the portfolio is behaving very well.
And sir, lastly, given that the operating leverage has been playing out quite beautifully, so any plans to pass on the benefit to customers, the current ROA and ROEs are very good. But any plans to pass it on to customers to give the benefit of the operating leverage?
So if you look at -- after February, we have not changed the price at a again, for next quarter, we are changing the price -- so we're retaining the same place to customers. We are not increasing any price. And already, we are the lowest base microfinance in segment. And I think we'll continue to ensure that. So customer gets the best from our side.
[Operator Instructions] We take the next question from the line of Sagar Shah from Philip Capital.
First of all, congratulations to the entire team on solid set of numbers they have done. So my first question was related to [indiscernible] In you had around sequential growth of around 4%, and actually, I wanted to just wanted to understand that, obviously, sorry, for repeating again, this part was already addressed before.
But I wanted to know to gain more knowledge in that sequentially, we grew by only 4%, it was below my estimate, actually. So was this just because of the Q1 being seasonally a quarter before? Or is it now that the competition is actually hurting less. Can you specify a reason for slow growth?
No, no. I think a sequential growth of [indiscernible] our portfolio growth is on the base of 18% growth we had in the last quarter, actually. So it's still good. And then I think you had to compare the Q1 the Q1 of FY'23 other than Q4 to Q1 actually. So if you see Y-o-Y the metrics are completely different and positive. We don't see any...
Y-o-Y is completely [indiscernible] that Y-o-Y versus if we compare Y-o-Y numbers, it was a strong quarter, but last Q1 actually was in different situation and a final altogether with the new regulation came into place, we had to degrow actually for one of the [indiscernible] so why -- is it safe to assume that in the next 3 quarters, we will see a stronger growth than this Q1.
See, next 3 quarters maybe. But then if you see compare the last year this year you said clearly, the Q1 last year was lower because of the regulatory implementation of what we did in the first 2 months and the [indiscernible] started growing whereas the growth in the last year, maximum came in the Q3 and Q4. So that is more of a higher, a higher base -- against the higher base, the third quarter is showing a little lower. I think at this point of time, we believe that we will continue to grow between 24%, 25%. And we'll again review after 1 to 2 quarter and see how this will change. We'll let you [indiscernible]
This similar growth will be contributed with steady flow of number that's outside Maharashtra, Karnataka and Tamil Nadu, actually. Which other states that are actually having getting traction, obviously, Madhya Pradesh is important state for your portfolio comprising [indiscernible] 8%. But outside of these other states, how is the demand or how are you planning out actually?
So demand and supply by and large even they're very well, but the higher growth is coming from the new geographies because the older growth -- older geographies are on a higher base, and the vintage. So the growth is lesser compared to the growth in the new state like Gujarat, Rajasthan, UP, Bihar, Jharkhand which gives the higher, higher growth, whereas Karnataka, Maharashtra, Tamil Nadu, MP will give the lower growth.
Okay. Okay. Sure, sir. Now just my last question is related to the asset quality. You have already stated that credit cost release obviously, if we take the management overlay at these levels. Now obviously, our asset quality has actually once a improved in Q1, and that's been commendable, your past [indiscernible] has come down to almost 0.7.
So my -- just my one suggestion or maybe from one from my end that, why don't we actually comes some extra provisions mainly for any, you can say, although we are holding a [indiscernible] but why don't we create some extra contingency or management over the provision so that may be unforeseen event in the next general elections or anything comes up we can is secured by that any -- or come back.
Sagar, I think I have already answered this question earlier. I think we will be clear that we are already holding indirectly holding the additional layer of management within our ECL system, which I explained already the earlier participant.
We take the next question from the line of Mr. Manoj [indiscernible] Securities.
Many congratulations on solid performance. And congratulations to Ganesh also for his elevation as CEO. So sir, question and clarification, I seek is on whether a promoter is looking at pairing for promoter stake in the near term? I'm checking just in the near term. And when would we likely raise capital since the growth is running ahead of expectations.
I think in my opening remarks, he clearly said about the promoter stake. So what is our objective and what is the it's already largely achieved what we have requested promoter on support to increase the [indiscernible] and on the increase in the float and although see that largely, we achieved that objective. So therefore, I think it's all be clear.
And the second part is we -- I think, again, we said clearly earlier that at least for next 7 to 8 quarters, we don't see any capital rise because you can see this healthy capital getting accrued and when we have sufficient cushion for growth for next 2 years. So there would be -- we don't estimate any capital rate for next 2 quarters, [indiscernible]. Sorry, next 2 years.
[Operator Instructions] The next question is from the line of Piran Engineer from CLSA.
Congrats on the quarter. Just wanted to get an update on the share of our unique customers. We usually used to have around 40%, 45%, but with how the industry has grown over the last couple of years, what would that number be today for us?
It is slightly reduced actually because as we grow in the newer geography as we grow in the existing geography, we were able to target more customers who might be the customer of other MFI, eventually moving as a unique customers. Therefore, from a 40% actually come down by 5%, 6% at this point of time. But what we observed is over a 7-month time that will becoming -- coming to us as a completely moving out of further MFI and coming as a full unique customer. So I think as the competition increases this type of unique customer numbers will keep changing.
Yes. And how many will have more than 1 lender like you and one more lender I meant.
Above 35% -- 30% to 35% more than 1 lender, only 1 lender sorry. More than one lender is about 28% -- 30% -- 20%.
Sorry, 20?
Sorry, 20 more than 1 lender. 20, -- 34% sorry.
So 34% of customers have 3 lenders, including you?
And then more than one lender you said. So more than 2 lender, if you want it is 14%...
Unique [indiscernible] is 34%.
Unique to 34, [indiscernible] is 32 and again unique plus 2 is 20. Then more 2 14, total 100, right?
Okay. Okay. So unique plus 3 is 14%. Okay. Okay. Got it. And sir, what are the -- which states have the highest share of unique customers like I'm just trying to think as to where is the white space, which is not yet penetrated by microfinance in terms of geographies.
Was our old geography where we have been established for more than many years, particularly Maharashtra, Karnataka, Tamil Nadu. So we always have very high percentage of unique customers.
We take the next question from the line of Mr. Ajit Kumar from Nomura.
Congrats for the good set of numbers. Just a few data keeping questions. What would be the average [indiscernible] price in this quarter?
It's about 48%. [indiscernible]
Similar to last quarter, right?
Same if you see outstanding protects when that remains same. In all 3 buckets below the [indiscernible] all in demand same only. There's no change.
Okay. Okay. And just last thing, any comment on borrower leverage, including all lenders having data for 4 to 5 quarters now?
So borrower leveraging is defined by regulator already. It's more of a leveraging -- rather than leveraging more of a [ IFIR ], how much they're actually paying their obligations to them, so that's more important. I think we have -- we can actually give up to 50% [indiscernible] obligation, you can go up to there. Over 75% of the borrowers have article is less than 40% today.
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Shreepal Doshi from Equirus Securities for closing comments.
Thank you Seema. And thank you to all the participants for being part of the call. We would like to thank the management of CreditAccess Grameen to give us -- for giving this opportunity to host the call. Thank you, everybody, and have a good weekend.
Thank you so much, and I'm passing on [ best wishes ] to Ganesh here. So thank you very much, and have a nice day.
I'm also thanking all of you people who [indiscernible] Thank you so much.
On behalf of Equirus Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.