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ICICI Securities Report
We believe CreditAccess Grameen Ltd. is well placed to deliver more than 4% return on asset driven by credit cost moderation in H2 FY23E (2.7% in Q2 FY23), net interest margin expansion and continued growth momentum.
Post migrating to risk-based pricing method in April 2022, it has increased lending rate by ~130 basis points and this has started reflecting in its blended asset yields.
Portfolio yield expanded by a sharp 70 bps QoQ to 19.1% in Q2 FY23 versus 18.4% in Q1 FY23.
Considering that the bulk of stress recognition and provision requirement was already absorbed during FY21-FY22, and that the stress book is negligible with participating 0 at 3% (PAR 90 at 1.8%), we expect credit cost to settle at less than 2% in FY24E.
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