CreditAccess Grameen Limited (CREDITACC) announced the transcript of its Q4 FY25 Results Conference Call held on Friday, May 16, 2025. The call was attended by Mr. Udaya Kumar Hebbar (MD), Mr. Ganesh Narayanan (CEO), Mr. Nilesh Dalvi (CFO), and Mr. Sahib Sharma (DGM - Investor Relations).

• FY25 Challenges: The microfinance industry faced a transformative year with challenges including extreme heatwaves, operational limitations due to prolonged elections, growing customer overleveraging, ringleader issues, tighter underwriting from MFIN guardrails, and temporary disruption from the Karnataka Ordinance targeting unregulated lending practices. The rising delinquency trend, which peaked in November 2024, reversed till March 2025 across all states except Karnataka.
• Operational Highlights:
  • New PAR accretion rate largely normalized across states (excluding Karnataka).
  • Strengthened employee strength from 19,333 in December 2024 to 20,970 by March 2025, with an annualized attrition rate of 30.5% in Q4 FY25.
  • Added 2.61 lakh borrowers in Q4 FY25 (43% new-to-credit) and 7.49 lakh new borrowers in FY25.
  • Opened 100 branches during the year.
  • Retail Finance AUM reached ₹1,543 crore, contributing 5.9% of the AUM (up from 2.7% a year ago). Unsecured AUM is approximately ₹1,100 crore, and the overall mortgage book is ₹350 crore (Secured business lending at ₹240 crore and home loans at ₹110 crore).
  • MFIN guardrails (three lender ₹2 lakh unsecured indebtedness) declined from 19.1% in August 2024 to 10.8% in March 2025.
• Financial Performance (Q4 FY25 and FY25):
  • Net Interest Income (NII) grew 1.7% QoQ to ₹876 crore in Q4 FY25. Portfolio yield stood at 20.4% and interest spread at 10.3%. Average cost of borrowing remained stable at 9.8% for the last seven quarters.
  • Net Interest Margin (NIM) was healthy at 12.7% for Q4 FY25 and 12.9% for FY25.
  • Pre-Provisioning Operating Profit (PPOP) stood at ₹634 crore in Q4 FY25 and ₹2,638 crore in FY25. Cost-to-income ratio was 31.9%.
  • The company took ₹479 crore in accelerated write-offs in FY25 for non-paying loan accounts (180+ DPD), resulting in an additional credit cost of ₹151 crore. Total write-off for FY25 stood at ₹1,124 crore.
  • Credit cost stood at ₹583 crore for Q4 FY25 and ₹1,929 crore or 7.7% for FY25, primarily due to the Karnataka issue.
  • Collection efficiency (excluding arrears) was 91.9% for Q4 FY25 and 92.4% for March 2025.
  • Gross Non-Performing Assets (GNPA) were 4.76%, Net Non-Performing Assets (NNPA) were 1.73% (both predominantly measured at 60-plus DPD). PAR 90 stood at 3.28%.
  • The company held ₹457 crore (179 bps) higher provision over PAR 90, ₹959 crore (370 bps) higher provision compared to IRAC prudential norms, and ₹98 crore higher provision compared to NBFC provisioning norms.
  • Q4 FY25 profit stood at ₹47 crore, impacted by accelerated write-offs.
  • Liquidity levels, including cash and cash equivalents, remained adequate at ₹2,336 crore (8.4% of total assets). Sanctions in hand amounted to ₹3,618 crore, with ₹4,664 crore worth of sanctions in the pipeline.
  • Capital adequacy remained comfortable at 25.4%.
  • Return on Assets (ROA) was 1.9% and Return on Equity (ROE) was 7.7% for FY25. The cross-cycle performance over the past 8 years shows an ROA of 3.6% and an ROE of 14.4%.
• Future Guidance (FY26): The company is aiming for an AUM growth of 14% to 18%, with MFI growth at 8% to 12% and the balance from retail finance. Expected NIM is 12.6% to 12.8%, credit cost 5.5% to 6%, ROA 2.9% to 3.4%, and ROE 11.8% to 13.3%. Management expects group lending business growth to be flattish in H1 FY26 due to write-offs, catching up in H2.
• Management Commentary:
  • Mr. Udaya Kumar Hebbar stated that the company is well-poised for FY26 on the back of stabilizing asset quality and improving business momentum. He noted the importance of balancing asset quality normalization and business growth amidst evolving industry challenges.
  • Regarding the Tamil Nadu bill, management confirmed no ground-level impact on collections or PAR accretion as of May 21, 2025, distinguishing it from the Karnataka situation due to the government's proactive exclusion of regulated entities and banks upfront.
• Leadership Transition: Mr. Udaya Kumar Hebbar will retire as Managing Director on June 25, 2025, and will be appointed as a Non-Executive Nominee Director and to the Managing Board of Credit Access India B.V. Mr. Ganesh Narayanan, CEO, will be appointed as Managing Director & CEO for a period of five years, effective June 26, 2025, subject to necessary approvals.