One more important factor to look out considering current loan book mix is - NPAs and their write off percentages - CUB claims that 3% shall be NPAs and only 30% is lost as writeoffs…as long as this holds, I think rest all shall be taken care as time passes…growth is not a concern as there shall always be demand for loans ( its understandable that growth shall not be linear unlike biggies like HDFC etc considering the higher percentage of MSME focus whose business has a factor of lumpiness)…As inflation grows , the working capital requirement for MSMEs should rise as the amount that gets blocked in inventories / debtors etc shall rise…despite inflation if these working capital loans are not increasing , that could have multiple reasons depending upon the nature of business. Other factors could be loss of customers to other competitors. If the competitors are just fintechs / some one who dont understand the lumpines of MSME business prospects, they shall be driven away with time…if competitor is some one who truly understands the nature of these MSME businesses, there there is a prospect of long term loss of market share…anyways with the digitisation and TAT reduction focus, this threat can be somewhat mitigated…Increasing retail focus which CUB is pursuing if successful shall be real game changer as CASA rises as suite of retail products rise leading to low cost of funds which is the ultimate moat in a commodity business like lending…
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