Leveraged Financials - Emerging Long-Tail Risks In Unsecured Credit: HDFC Securities

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities.India’s heterogenous unsecured retail credit market ($160 billion; three-year compound annual growth rate at ~23%) has been in the headlines ever since the Reserve Bank of India clamped down on select categories of consumer credit.Our discussions with experts suggest that the RBI note of caution is largely centred on small-ticket personal loans (ticket size less then Rs 100000), which account for a high incidence of systemic blind spots, dominant share of incremental disbursements, and elevated early-stage delinquencies, especially across static pools.The RBI’s risk-weight measures are likely to increase the hurdle rate for banks and non-banking financial company towards unsecured consumer loans, resulting in a material growth deceleration.We continue to hold our below-consensus growth forecasts (1-2% across our coverage universe) and remain conservative on incremental spreads (blended FY24 net interest margin at 15-20 basis points below FY23 levels), considering the impact on incremental asset mix.Our top picks are ICICI Bank Ltd. (target price: Rs 1,200) and State Bank of India (target price: Rs 780) among large banks; and Bajaj Finance Ltd. (target price: Rs 8650) and SBI Cards and Payment Services Ltd. (target price: Rs 955) among NBFCs..Click on the attachment to read the full report:.Adani Group Stocks Adds Over Rs 12,000 Crore In Investor Wealth.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Leveraged Financials - Emerging Long-Tail Risks In Unsecured Credit: HDFC Securities

The RBI’s risk-weight measures are likely to increase the hurdle rate for banks and non-banking financial company towards unsecured consumer loans, resulting in a material growth deceleration.

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Leveraged Financials - Emerging Long-Tail Risks In Unsecured Credit: HDFC Securities

The RBI’s risk-weight measures are likely to increase the hurdle rate for banks and non-banking financial company towards unsecured consumer loans, resulting in a material growth deceleration.

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