Analyst Concall
See cost of funds falling 34-35 bps in FY26 - Bajaj Housing
This story was originally published at 20:46 IST on 23 April 2025
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MUMBAI – Bajaj Housing Finance Ltd.'s management said that if the Reserve Bank of India cuts the repo rate by 75 basis points in 2025, the cost of funds is expected to drop by 34-35 basis points in 2025-26 (Apr-Mar). The cost of funds has been stable at 7.9% since FY25.
"On a 75 bps (repo) rate cut cumulatively, we should see 30-35 bps kind of a pass through on a full year basis in FY26," the management said.
The management also said that if the loan mix is maintained as is, the net interest margins are likely to moderate by 10-15 basis points in the year, as they expect to have an impact on the yield of 40-50 basis points with a cumulative rate cut of 75 bps. The company's margins have been stable at 4.0% since Oct-Dec.
"We will target to cover a reasonable portion of that hit what we expect from the NIM compression. The full impact cannot be covered because there is a larger book sitting there, but our intent would be to compensate or mitigate a larger part of the hit which will be there from the yield or a NIM compression in terms of a declining rate scenario."
On Tuesday, the company announced its financial results for the quarter ended March. A sharp rise in net interest income and assets under management helped Bajaj Housing Finance report a 54% jump in its net profit for the March quarter to INR 5.87 billion. Net interest income of the lender rose 31% on year to INR 8.23 billion.
The asset quality of the housing financier remained robust with the gross non-performing asset ratio at 0.29% and the net non-performing asset ratio at 0.11%. Credit cost of the company was at 0.12%. The medium-term guidance for gross non-performing loans is 40-60 basis points and for credit cost 20-25 basis points, the company said.
On the National Stock Exchange Wednesday, shares of Bajaj Housing Finance closed 0.5% higher at INR 131.88. End
Reported by Kshipra Petkar
Edited by Deepshikha Bhardwaj
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