Detailed Narrative
Q1 FY26 Performance Overview
CreditAccess Grameen Limited commenced FY26 with positive momentum, achieving its highest-ever Q1 disbursement. The company reported a PAT of ₹60 crores for Q1 FY26, translating to an ROA of 0.9% and ROE of 3.4%. Net interest income grew 7% quarter-on-quarter to ₹937 crores, with a portfolio yield of 20.3% and a stable NIM of 12.8%. The cost-to-income ratio stood at 33.5%, and PPOP was ₹656 crores.
Asset Quality and Write-offs
Asset quality showed signs of stabilization, with the PAR 15+ acquisition rate improving significantly to 0.46% in June '25 from 1.34% in November '24. However, the company undertook a substantial write-off of ₹693 crores in Q1 FY26, including an accelerated write-off of ₹603 crores related to 180+ DPD non-paying accounts. PAR 90 stood at 3.29%, GNPA at 4.70%, and Net NPA at 1.78%. The company maintains strong provisions, holding ₹331 crores (133 bps) higher than PAR 90.
Funding and Liquidity
The company's average cost of borrowings declined by 8 bps to 9.7% at the end of Q1 FY26. It successfully raised ₹2,570 crores in Q1 FY26, including partial drawdowns from its maiden US$100 million multi-currency syndicated social loan. Liquidity levels remained adequate, with cash and cash equivalents of ₹2,025 crores (7.3% of total assets). Additionally, CreditAccess Grameen has sanctions in hand of ₹3,093 crores and a pipeline of ₹6,500 crores, with capital adequacy remaining comfortable at 25.5%.
Retail Finance Strategy and Diversification
The retail finance portfolio, a strategic growth lever, saw its share increase from 2.9% to 6.8% year-on-year by the end of June 2025. This segment primarily comprises unsecured business loans for graduated customers (around ₹1300 crores) and secured mortgage/home loans (₹250 crores and ₹134 crores respectively). The company aims to diversify its portfolio, targeting a retail finance mix of 12-15% by 2028, up from the current 6.8%.
Employee Costs and Attrition Management
Employee count grew from 20,970 in March '25 to 21,333 by June '25, with an annualized attrition rate of 27.1%. Employee costs were elevated in Q1 FY26 due to new hires and normative salary increments, but management expects the OPEX/AUM ratio to drop below 5% by year-end. While attrition in Tamil Nadu remains slightly higher, the company manages this by maintaining a higher bench.
Growth Outlook and Branch Expansion
The company is confident in adding approximately 1 lakh customers per month, aiming for an overall borrower base growth of 5-7% for FY26. Branch expansion is progressing, with 54 new branches opened in Q1 FY26, contributing to a total target of around 200 new branches (8-10% growth) for the year. Management projects MFI book growth in the early teens (13-15%) and overall growth (MFI + Retail) in the 20-25% range for FY26.
JLG Model Viability and Customer Progression
Management believes the Joint Lending Group (JLG) model remains viable as an entry point for customers into the formal financial system. However, they anticipate that the 'probability of the customer's life in the JLG model could be shorter' as customers graduate. The strategy involves customers starting with JLG, building a credit history over 2-3 years, and then progressing to individual loans, reflecting an evolved customer philosophy and long-term retention focus.