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00:00We are now taking stock of Capri Global and how the quarter has gone by and for that we
00:04are in conversation with Rajesh Sharma, the MD of the company.
00:07Mr. Sharma, good morning.
00:08Thanks so much for taking the time out.
00:11Well, we are looking at a fairly stable top line growth with about 27% year on year growth
00:17in your net interest income.
00:19Your non-net interest income also has risen by around 35%.
00:25Sir, can you take us through the various factors behind the top line growth and also keeping
00:33in mind specifically the trends that you are witnessing in advances and deposits.
00:39Can we expect this through the course of the balance of this financial year?
00:42Yeah, sure.
00:45So, I think this quarter we have seen a strong growth momentum in overall AUM.
00:50Our AUM have grown 11% quarter on quarter and about 50% up on year on year basis.
00:57And that growth has resulted in a higher net interest income and our margin have also improved
01:03because the higher interest rate spreads have resulted in this.
01:11This quarter we have also launched the micro lab product where we will be funding those
01:16customers below up to 5 lakh rupees of ticket size in a rural bank against their collateral
01:23to the small entrepreneur.
01:24So, that's a new product we have launched.
01:27We have added branches.
01:28So, now currently we are about operating with 968 branches to work with.
01:35So, the entire growth is happening because of the growth in the branches.
01:41AUM have grown and then we have seen that even our overall spread is also improving.
01:47So, it is giving a good direction despite we have launched our new technology in-house
01:53built technology platform which has taken a couple of months to stabilize.
01:57So, we will clearly see that in the quarter starting from October onwards, we will see
02:03a full benefit coming of the technology and this year should end on a very good note.
02:10It's also Samina joining in.
02:12The numbers look promising and like you said the outlook also looks pretty strong for the
02:16rest of the year.
02:18Net interest margins have improved significantly in this quarter.
02:22Maybe not significantly but about 60 basis points queue on queue.
02:27What's the outlook on margins going into the rest of the year?
02:30Do you think there could be upside risk to that number?
02:34So, I think margin should remain at this level because we also seen the cost of fund is going
02:41up.
02:42So, any improvement in the margin to some extent will get offset by the increasing cost
02:46of fund as well but overall we should see a spread maintaining at about 7% and which
02:52is higher by 70 basis compared to previous year purely because the contribution from
02:58the Golden Microlab will help to maintain this increased margin throughout the year.
03:05Mr. Sharma, while we take your point on cost of funds and I think that's more of an industry
03:10phenomena as we see it, but provisioning for this quarter is also almost doubled year-on-year.
03:17Is that simply in line with your net, you know, your revenue number or is that exceptional?
03:23What is behind you providing more for your accounts currently?
03:27So, we have seen some of the account from MSME restructure pool have slipped into the
03:33MPA and being a conservative approach, we have made the higher write-off and provisioning
03:42in this year to clean up the balance sheet and we believe that in the year ending, this
03:49will not be the phenomenon and this will be overall in line with our credit cost less
03:55than 1%.
03:56So, this is one of the quarter where we have seen that lot of slippage have happened from
04:02the restructure pool but on the next quarter onwards, this will be much better.
04:08Right, Mr. Sharma, also quick take on your expectation in terms of the way you expect
04:16the mix to come through over the next couple of quarters and can that have some sort of
04:22an implication on your net interest margins?
04:25That's the first part of the question and so, should we start seeing the RBI cut rates?
04:30So, how soon do you think there could be transmission and what segments that Capri Global caters
04:36to would likely see that come through as well?
04:40So, coming to the first part and second part put together, I think we cater to the MSME
04:49which is a ticket size of 19 lakhs, gold loan which is a ticket size of 90,000, we cater
04:54to the home loan, affordable housing segment, ticket size again about 17 lakh rupees.
05:00So, the entire portfolio is very, very granular.
05:03If you see 80% book is a retail and the 20% balance book is a construction finance.
05:08Again, that is also being written in retail way.
05:11So, if we come back to how the overall, the contribution from each segment would look
05:18like, I think the MSME gold loan will be about 28, 27% each, about 25% will be from the affordable
05:30housing segment and about 20% will be from construction finance.
05:35How the composition would look like.
05:38Right.
05:39Well, Mr. Sharma, we leave it at that.
05:40Thank you so much for joining us and taking us through the quarter as well as what we
05:44can expect going forward.