Financial Services Q4 Review: NBFCs Outpace Banks With Strong Credit Growth, Evolving Funding Mix: DRChoksey

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.

DRChoksey Report

During FY25, non-banking financial companies demonstrated a remarkable performance, outpacing their banking sector counterparts in overall credit growth. NBFCs achieved a credit growth of 20.0%, compared to the banking sector growth of 12.0%. This significant expansion in credit was largely driven by robust demand for gold loans, which led to an increase in the total net advances of the NBFC sector, reaching Rs 24.5 trillion.

The balance sheet of the NBFC sector observed a significant expansion of 20.0% YoY to Rs 28.2 trillion. Concurrently, total borrowings increased by 22.0% YoY to Rs 19.9 trillion, which underscores the strong funding activity that is aiding the sector's robust momentum.

The overall sector's profitability witnessed mixed trends; with the mainboard NBFC companies, profit grew by 8.0% YoY while the MFI segment net profit declined by 95.0% YoY, driven by elevated stress and peak provisioning.

During Q4 FY25, within our coverage, Jio Financial reported the highest sequential AUM growth at 139.4%, followed by Poonawalla Fincorp at 15.0% growth. Jio Financials' growth momentum was led by its expansion into tier-1 cities, launch of the Jio Finance App in Q1 FY25, integration with MyJio App in Q2 FY25, and introduction of Gen-AI based loan products across home loans, LAP, and loans against shares and mutual funds.

We prefer Cholamandalam and Bajaj Finserv for their strong brand equity, market positioning, and diversified growth in secured lending. HDFC AMC remains our top pick due to its improving market share, strong AUM growth, and expanding product offerings.

Click on the attachment to read the full report:

DISCLAIMER

This 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.