Bajaj Finance Ltd (NSE: BAJFINANCE) Q4 2026 Earnings Call dated Apr. 29, 2026
Corporate Participants:
Rajeev Jain — Vice Chairman and Managing Director
Sandeep Jain — Chief Operating Officer and Chief Financial Officer
Anurag Chottani — Chief Operating Officer and Chief Technology Officer
Analysts:
Ajit Kumar — Analyst
Abhishek Murarka — Analyst
Shreya Shivani — Analyst
Kunal Shah — Analyst
Piran Engineer — Analyst
Kuntal Shah — Analyst
Viral Shah — Analyst
Shubhranshu Mishra — Analyst
Onkar Ghugardare — Analyst
Bharat Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Bajaj Finance Limited Q4 FY ’26 Earnings Conference Call, hosted by JM Financial Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Ajit Kumar, Executive Director, JM Financial Limited. Thank you, and over to you, Mr. Kumar.
Ajit Kumar — Analyst
Thank you, Dheerav. Good evening everyone. This is Ajit Kumar from JM Financial. Welcome to Q4FY26 earnings call of Bajaj Finance Limited. On behalf of JM Financial, I would like to thank Bajaj Finance Management for giving us the opportunity to host them. To discuss the earnings, I am pleased to welcome Mr. Rajeev Jain, Vice Chairman and Managing Director; Mr. Sandeep Jain, Chief Operating Officer and Chief Financial Officer, and other senior members of the management team.
I now invite Mr. Rajeev Jain for his opening remarks, post which we will open the floor for Q&A. Over to you Rajeev.
Rajeev Jain — Vice Chairman and Managing Director
Thank you Ajit. Thank you JM. Good evening or good morning depending on the geography that you’re in. And welcome to BFL Q4 earnings call. The investor deck for Q4 has been uploaded on our website. I hope you had an opportunity to go through the same. I’ll focus on key updates for Q4 year one, why and management assessment. Before I open the floor for Q and A. I expect to take between 20 and 20. Between 20 to 25 minutes. Let me just quickly jump to panel number four. Let me just clarify and it’s given in yellow there that these numbers are before one time actions and a set of presentation changes.
Overall I would say from a company standpoint it was a pretty strong quarter across all key metrics of volume, new customer addition, AUM growth credit, cost profit growth, return on assets and return on equity. During the quarter the company crossed a milestone of 5 lakh crore. AUM, it’s a proud moment for us as a company to end the quarter at approximately 5,10,000 crore. In Q4, AUM grew by 22.4% and PAT grew by 26.7%. In Q4, AUM grew By a record 25,500 odd crores. We booked 12.9 million loans and added 3.93 million new customers to the franchise.
Overall, the customer franchise as of FY26 March 2019.3 million customers. Let me now go to panel five. It’s a little busy slide. There are set of one timers pertaining to in this panel. I’ll try and explain their set of one timers that are pertaining to Q4FY25 and Q4FY26. The principal objective of this panel is to provide a simplified reconciliation of core financial performance with that of reported numbers. That’s objective. Let me start first of all with Q4FY25 last year in Q4 last year the company had recorded an additional ECL provision of 359 crores.
Also in Q4FY25 the company had recorded a tax benefit of 348 crores. That’s Q4 last year in Q4 this year the company has taken an additional ECL provision of 142 crores towards management and macroeconomic overlay. That’s point number one. 2. The company has also revised disclosure of recoveries against return of loans. This was earlier presented under other operating income. It will henceforth effective Q4 FY26 will be reported under loan losses and provisions a net number. This has no impact on PVT and PAT for the quarter but changes the ratios.
It principally leads to redefining two key metrics which are important for investors and for us as management which is opex to NTI and loan loss to average AI. As a result of this change, the opex to NTI is increasing from 32.5 33.2% which is what it has come in to 33.8% as a result of this reporting change. And loan loss to average AR is reducing from 1.75% to 1.65%. So this is really how we will report going forward As a company you have to adjust your. The analysts will have to adjust the numbers to reflect this.
I just want to just to summarize once again. This panel principally is intended to help clearly depict the core profitability which has seen a growth of 26% on PVT as you can see and 27% for SAT. Let’s now jump. I’ll quickly cover the key points on panel 6, 7 and 8. I’ll only cover the high points. As I already said, AUM crossed 5 lakh crore. The growth was pretty secular across all businesses. The Gold loan portfolio continued to witness strong momentum. It grew by 115%. The business now contributes to 3.5% of overall AUM.
We foresee gold loan portfolio to probably cross 5 odd percent of total AUM by FY27. Other lines of businesses also continue to grow in a healthy manner that’s covered in balance 67. Later in the slides, MSME continued to see muted growth. It grew by 6% only on account of a set of proactive risk actions that we have been taking since Q2 FY26. We expect that it should come back to double digit growth or the company growth momentum between Q2 and Q3 of FY27 cost of funds improved by 4 basis points in Q4 and came in at 7.41%.
NIM remained steady deposit book came in at 68,533 crores. It contributed to 16% of consolidated borrowings. OPEX 2 NTI, going back to the earlier point that I made, came in at 33.8% in Q4 as against 33.6%. These are new numbers. Otherwise it came in at 33.2 and an improvement of 10 basis points versus Q4. Last year there was a marginal increase sequentially primarily due to Now I’m talking sequentially on account of cost of new labor code and accelerated Gold loan branch expansion. EIA implementation continues to accelerate across the length and the breadth of the company and I’ll cover that shortly.
Full time employees stood at 71,613 employees. We added just a tad below 1800 employees in Q4. 50% of them were actually in gold loan and MFI. Low loss to average AUM as you know what investors have been used to came in at 175 basis points or 1.75% as against 1.97% in same period last year or Q4 FY25 stage 2 and stage 3 assets just to give you texture on credit quality have sequentially reduced by 430 odd crores. We have seen continued improvement on this metric through FY26 over the last three quarters.
The vintage credit performance does not show up in loan loss to average AUM across 3 mob 6 mob 9 mob continues to reflect significant improvement in credit quality and gives me reasonably high degree of optimism about credit cost outlook for FY27. I’ll also cover two key points. Which will further reflect our confidence on credit cost outlook for next fiscal which I’ll cover in a moment. But GNP and NPA came in at 1.01 and NNPA came in at 41 basis points. Provision coverage ratio was at 60% as against 54% same time last year.
The point that I made on credit quality a reasonable amount of credit costs in the previous year came in from the MSME line of business which as I said we’ve already taken reduction, proactive reduction by close to 30 odd percent. That’s where it grew by 6% in full year where the company grew by 22 and a half percent. It should be back in growth mode and I think in our assessment the worst is behind us by June 26th. The captive two wheeler and three wheeler business which now contributes to less than 1% of AUM but even in Q4 accounted for 13% of GNP and 5% of overall credit cost.
In Q4 this book will principally possibilities wind down to less than 1500 odd crores which is virtually nothing by September 26th. It will lead to further improvement in GNPI and should result in lower credit costs for FY27. Let me now just cover Finai Transformation. There are five panels. They may seem heavy but I want to spend just a moment to make point that and that’s why we’re providing a reasonable amount of coverage on PIN AI transformation that there’s a principal difference between deploying use cases and transformation.
Fundamentally transformation is about reshaping the business model and in general covers all aspects of business. I just want to highlight that we are doing transformation and we are not doing use case deployment. That’s why we are presenting the expanse of the work companies doing on AI. So that’s just one point I want to leave. We expect FY27 to be probably the busiest year from a FINAI transformation in terms of outcomes, inputs and outputs as a firm and significant amount of time, effort and energy of management team over the last 1518 months is going into it and should start to reflect in terms of the way consumer and employees experience us as a company in FY27.
Just to give you some texture on the on the transformation work, I’m on panel nine the company I mean the biggest part of AI is about whether you have the talent or not. We had 203 people in the firm who are dedicated as the AI unit. We are expanding that to 363 order sources by June 27th. So we continue to expand the AI resourcing to ensure it can meet our aspirations and ambitions of becoming a FINAI firm. The step number one and in finai transformation clearly is about data for AI. You know 52 million voice to data conversion happened around 2.3 million text to data conversion happened and leading to significantly better insights on engagements or conversations with customers.
AI generated digital banners and videos are enabling faster and cost efficient marketing and Discovery Infrastructure Almost 100% of our videos are now AI generated on customer engagement. 27 AI voice and text bots are now live and all customer engagement is going into bot interface by June 26th. By June 26th any communication across any channel by us as a firm, whether for sales service, GMS would have a text bot in it. So across 32 different lines of businesses that we run plus whole lots of whole host of services and we send as I’ve said In the past 160 odd million pieces of communication on a monthly basis all of them will have a bot embed in it.
On customer onboarding, AI based data extraction, auto filler application, product level scans, label scan, auto QC are increasingly reducing manual effort, improving controllership and straight through processing the whole host of numbers that I’ve given here. The idea is to all the way between panel 9, 10 and 13 there are numbers that you can see here. As I said the intent is to principally give you texture that how we are structurally going about process by process and asking a question why can AI not be deployed in these processes rather than why it can be deployed.
The most important dimension I’m on panel 12 is we’ll start to deploy agentic platforms on our from an architecture and roadmap standpoint in FY27 we expect to deploy 800 plus autonomous agents and across operations, GMS, HR technology and risk that’s really on AI. We can take more questions. I don’t want to take more time talking about it. Let me just quickly go to full year performance. That’s panel 20. At a core to core level it is a strong year for the company across all key metrics and I think I am reasonably confident that we are getting back into a strong growth momentum across all key metrics.
As a FIRM we crossed two milestones. As I said, 5 lakh crore AUM and 50 million new loans. The year so far has started off pretty well. It’s likely for the first time we’ve never done 5 million loans in a month. I mean while the West Asia conflict is going on one hand when we look at the consumer momentum on the ground, it’s very likely we’ll cross excess of 5 million plus loans in the month. Our last peak was 4.6 odd million loans and that was in festival period. So clearly the company continues to generate momentum.
Overall last year we booked 52.5 million loans and added 17.5 million new customers on a full year basis. AUM I Talked about grew 22% PAT grew 24% ROA for OPEX to NTI I talked about it showed an improvement of 36 basis points despite rapid expansion of world loan branches. Reasonable expansion of MFI branches by the firm in last year. So that’s really on cue on the full year performance. You guys anyway track it so I don’t have to cover that. Let me cover what is important as to how do we see the outlook to be just on the previous year gone by the board of directors have dividend has been recommended to shareholders of six rupees per equity share. So, that’s a 600% dividend. It’s broadly in line with the dividend last year as we had outlined that part of the dilution that we do in BHFL will be shared with the shareholders.
So we’ve continued to in that spirit continue to stay on course of that as well. So that’s really last year. Let me now go to important panel as to how do we see the management assessment to be from a next fiscal standpoint. As I said, the year so far seems to have started pretty well. We are well on course to cross 5 million loans in a in a single month as a firm.
I’m on panel no, go to 20. Go to 27. Yeah, so I’m on panel 28. Of course I must just flag that the FY27 assessment is based on expectations of easing geopolitical tensions and macro stability. That’s I’m sure it’s understood but I thought it’s important I make the point yet again that it’s contingent upon, you know, easing geopolitical tensions and macro stability. Subject to that. The first point is our transformation making the business AI ready. I’ve already talked about it. We will see significant acceleration and deployment of AI use cases across revenue cost, customer engagement, underwriting, controllership, security.
As a firm in terms of customer franchise, we continue to be confident of adding 15 to 17 million new customers in FY27. In terms of AUM, we’re confident of a 20 to 24% AUM growth aided by new businesses that we’ve launched in the last few years as they begin to scale even last year they contributed 3% of the total growth. So rather 3.5% of total growth even the previous fiscal and as we gain greater confidence our share market share in those businesses and their contribution to the business should grow and we expect marginal moderation.
It’s a little bit contingent on how interest rates play out leading to caused by geopolitical tensions on OPEX to NTI. We expect to see continued improvement of 25 to 40 basis points from current levels on credit cost. This is a new credit cost metric which as I said we just reported a 165 basis points or 1.65% credit cost to AUM then the revised metric. We expect this to continue to trend down. The reasons I talked about earlier which is winding down of portfolio in the MSME business being out of the woods by June 26th.
In terms of profitability we are pretty optimistic about the profit growth. ROA came in as of fourth quarter at 4.6%. We continue to guide for a 4.4 to 4.6% return on equity came in at 20% in the current quarter we continue to guide for 19 to 20% and GNP and NPA we expect them to remain range bound and within well within our long term guidance. I think that’s really all I have to cover. Just quickly on BHFL companies already reported its performance. They had a good quarter on disbursements, AUM asset quality, OPEX and profit.
Their divestments and AUM growth remains strong at 23%. Their loan approvals are up a record 37%. OPEX 20 I continue to improve for them came in at 19.2% as against 21.8%. I’m sure Atul has shared what is long term view on where he foresees OPEX 20i to get to be a preeminent mortgage company in this country. PBT for them in Q4 grew by 20% and PAT excluding one time reversal grew by 20% and asset quality continued to remain very very healthy with GNP and NNP at 27 and 11 basis points. BFSL though small continued to grow, delivered a 77% growth in AUM and their profits were up 50%.
They added 124,000 new customers in Q4 and delivered a ROE of 10.5%. So that’s really on BFL Q4 the management guidance and its subsidiaries. The management guidance for FY27 just the last point which I did not cover. I should have covered on panel 60 in terms of portfolio quality across panel 60, 60, 70 onwards 70, 71, 72 and 73 continue to all be in green are seeing sequential improvements across our portfolios. Only business loan professional loans is yellow which I’ve articulated twice over the last 20 minutes on how we foresee that this should turn. This will not turn green in a quarter because the denominator also has a role to play as it starts to grow by Q2 or Q3 we will start to see this turn to green. That’s really the quarter gone by, year gone by. And our guidance for assessment, management assessment for next year.
We are happy to take questions as management.
Questions and Answers:
Operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchdown telephone. If you wish to remove yourself from the question queue you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question gives some news.
The first question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Abhishek Murarka
Hi Rajeev. Hi Sandeep. Thank you for taking my question. Hi. So just to get this whole guidance of credit costs very clear if you don’t mind, can I refer to the press release where you’ve given a summary of consolidated financial results. There your number is gross loan provisions of 2,126 crores and then 260 crores of recoveries. So the next loan provision is 1866 crore. That 1866 is works out to 165 bps in 4Q. And against that you’re guiding for 145 to 160 bps next year full year. Is that the right understanding?
Rajeev Jain
Yes.
Abhishek Murarka
That is perfect, right?
Rajeev Jain
Yes.
Abhishek Murarka
Yes. And Just the annual number 7934 that works out to 175. So on an annual basis 175 goes down to 145 to 160.
Rajeev Jain
Yes.
Abhishek Murarka
That is Perfect. Okay. So now in this 145 to 160. As you said, this takes into account a de escalation of geopolitical issues. So here you have not accounted for any kind of adverse impact of this geopolitical issue, right? If anything comes up second half or something then this may go up depending on how things play out in.
Rajeev Jain
Yes. The important point however you finish, you finish, Abhishek.
Abhishek Murarka
Yeah. No, no, that is. Please go ahead.
Rajeev Jain
I would just say the more important point or a meta point in this is we are entering the year on credit cost with tailwinds. You know headwind over headwind virtually would consume twice the fuel. Thankfully we are entering the year with tailwinds. We have momentum we can navigate even if the environment weakens. I think that’s how I am looking at the business at this point in time.
Sandeep Jain
So I think what Rajeev is trying to say, some level of conservatism in terms of doing the number crunching and giving a guidance of 145 to 160 has been done. We have to wait and see how situation evolves.
Rajeev Jain
I’m also making a point that we have tailwinds on credit cost. Let’s you know. So we don’t have headwinds. So that itself is a big help.
Operator
Thank you Abhishek. I’ll request to come back for a follow up question. Ladies and gentlemen, a kind request. Please limit yourself to one question per participant and rejoin the queue for a follow up question. Next question is from the line of Shreya Shivani from Nomura. Please go ahead.
Shreya Shivani
Yeah, thank you for the opportunity. My question is on the guidance. The long term guidance of ROA probably inching towards 4.3 to 4.7 percentage. I mean for FY27. I understand you’ve given the explanation on opex and probably that will be the bigger driver. But if you can help us get into the details of this 4.3 to 4.7 over the longer term that you have spoken about. Also for FY27 as per the. I mean the basic maths that I was picking up, you may need a little bit more NIM expansion to achieve the ROE guidance for FY27. Is my understanding correct or not? Please let us know. Yeah.
Rajeev Jain
Sorry, just repeat the last point.
Shreya Shivani
So for FY27 also as per my math, you will need a NIM expansion also or at least a NIM stable flat NIM or an expanding NIM to achieve the ROE guidance for FY27.
Rajeev Jain
Yeah, okay, got it. See the answer is to. The second part is no. See look, if you, if you go back to. If you go to panel 35 which is a 19 year long snapshot feeds like a. Doesn’t feel like that long. Actually 19 years. If you see, if you see since FY20 forget FY21. But even if you take FY80, 19. 4.2, 4.1 FY22, 4.2. I’m losing, I’m leaving 4 point. I mean FY23 5.3, 5.1, 4.6, 4.3. I think we continue to. Numbers speak for themselves. I’ll add a dimension of Roe. Roe guidance of 2022 last six years adjusted for Covid speaks for themselves.
So and during this period, as you can see from a balance sheet standpoint, the balance sheet moved from 115,000 crore to now 510,000 crore. So should give you confidence that we can continue to sustain the ROA at times by expanding margins, at times by reducing cost, at times by Reducing credit cost. These are the three principal levers in terms either growth four levers rather growth margin, expansion, operating expenses and credit costs. Depending on how, what the environment is, what is the state of the business. We orchestrate these four to deliver an outcome of 4.3 to 4.7% ROA and 20 to 22% ROE to investors on a long term basis.
Sandeep Jain
Just to help you with the maths on 4.6, 4 point the guidance metric for the next year on ROE. And that’s the reason why Rajeev, when he presented the financial statement and numbers, he said look at the core financial performance. If you look at core financial performance for last year, the ROI came in at 4.6 and the guidance that we are giving for next year is 4.4 to 4.6. I don’t think that there will be a need for NIM expansion in the next year. To be able to deliver that. We have to ensure that we grow nicely which is where the 20 to 24% guidance has been given.
And we have to ensure that we remain reasonably anchored on the operating performance of the company which is opex to NT as a metric and loan loss to credit, loan loss to average. Yes. As we deliver that I think there is enough and more headroom available in the ROI profile of the company.
Operator
Thank you very much. Next question is from the line of Kunal Shah from Citigroup. Please go ahead.
Kunal Shah
Yeah, so on the growth guidance, 22 to 24 odd percent apart from SME which you appear maybe it’s almost bottomed out. We have started to see the sequential growth and we will get into double digits X of that when we and the newer businesses, where do we see we would be able to grow at a pace faster than the overall AUM growth? And which segments do you still believe could continue to lag so particularly on our core segments as well. If you can highlight that, that would be helpful.
Sandeep Jain
So Kunal, the idea would be to maintain the portfolio mix. I think that’s very, very dear to us. That gives us the right balance of risk and profitability. So that’s going to be the agenda for next year as well. Having said so, I think when you look at current year number of 22.4% of AUM growth, this is impacted by two things. One, the captive tool at financing business has seen an attrition of 60%. That’s almost 6,500 crores of attrition that we have recorded in the current year on account of winding out of capital. That’s one.
Second MSME, the growth used to be 25 28, 30% has been brought down to 6%. These two business one, the impact of captive dial down will be much, much lesser in the next year. MSME should start to come back into some growth momentum to double the number from second half onwards. These two things should provide tailwind on the overall growth number. Having said so, there are few businesses which are new in nature like gold loan, financing, tractor CV and so on so forth. They may grow faster than rest of the business because of very, very low basis.
Of course gold is no longer a low base. It’s 18,000 for the balance sheet. But given that we are taking a growth stance in that business of doubling down on our branch presence in that business in the next year, we are reasonably hopeful that that should lead the overall growth profile of the company for the next year as well. And Rajeev did make a point that the current contribution of gold low is about 3.5% of the balance sheet. All goes well, this should start to look towards 5% kind of number in the next year as well.
So these are some of the business where we see there could be an additional growth potential. Having said so, we find secular growth opportunity across all businesses. And our market share in most of the businesses continues to remain small, allowing us significant headroom for growth perspective.
Rajeev Jain
Just the last one I’ll make Kunal. If you plot panel 63 of composition of a balance sheet over a period of even last year, five years, you will not see material movement at all actually. So you know, you see very little movement. Number one. The base of each one of them is very large. I mean there are moments like gold loans that come once in a while. Otherwise you will see reasonable secular growth and a reasonably diversified portfolio.
Operator
Thank you. Next question is from the line of Piran Engineer from CLSA. Please go ahead.
Piran Engineer
Yeah. Hi team. Congrats on the really strong set of numbers. I’ll try to squeeze in two questions if you don’t mind. Firstly, can you just share some portfolio cuts or what you’re seeing in the environment that gives you the confidence to pick up on MSME growth? That’s my first question. Second question is, you know, in new consumer products like car loans, gold loans, etc. How many, like what percentage of our business comes from existing customers and how many from new customers?
Rajeev Jain
Yeah. So Piran, if you recall in Q3, I made a point that I’m not necessarily a very big believer in macro. We are a micro business. You’ll find it in transcript of last quarter. At a design level, MSME is a very Very large sector. You just have to pick what you can digest from a risk standpoint. And that’s really what we’re doing even at this point of time as we speak. Based on our assessment we prune business by 100 odd crores. We monthly do around 40 and we used to do 1800 crores, we brought it down to 1400 crores.
We’ve further taken cuts in the current month based on our understanding. But as I mentioned the guidance next year is based on stabilized stable environment and geopolitical environment and macro stability. We are very clear about from a micro standpoint, from a location, businesses and underwriting as to what will deliver growth. So I think that’s just first part of your the answer to your MSME point. And it’s a reasonable takeaway for us that our businesses we know but that you’d always remember our business is micro not macro. I think that’s point one.
The second point you’re asked on…
Sandeep Jain
Contribution of new existing customers for new business.
Rajeev Jain
For new businesses. It’s a metric that we drive. So let’s say you take two wheeler as an example. Okay. It’s a new business three years old. The open architecture two wheeler business. The new customer performs better than. Oh sorry. ETB performs significantly better than NTB. 50% of the two wheeler customers that we bring to the table is an ETV customer between 43 to 45% of new car financing customers that we bring to the table every month. That’s a 450 odd crores of. 450 to 500 crores of volumes you do every month comes from ETB.
As I shared as part of our annual Investor outlook, the five year outlook that business by business the 120 million franchise principally has very high wallet share on across each line of business that we are in. I give an example of new car finance, new car finance and used car finance. 35% of all new car finance and used car finance as per bureau data principally comes from this 120 million customers. Okay. Personal loan. Our market share is between 8.5 and 9%. At India level the number is 40%, 45% of personal loans takers in India come from our 120 million franchise. So I can go on business by business risk and wallet and operating leverage. All three require us to focus on this metric across all our 32 lines of business. And we track it very diligently and ensure that we deliver the mix that we have planned for.
Operator
Thank you. Next question is from the man of Kuntal Shah from Oaklane Capital. Please go ahead.
Kuntal Shah
Hi team. Thanks for this opportunity and thanks for wonderful results. I have two questions. One is what kind of capex or investment we are going into AI infra can you so give some color and what kind of ROI and payback you are investing. And secondly is when it will start impacting the PNL via either cost saving or you know, some kind of. Yeah, faster turnaround or whatever. Whatever the metrics you are taking.
Rajeev Jain
Yeah. So benefits. As I said, consumers and employees both should experience in the current year what AI does for them. So that’s one part. As I said, SMS or bots being the simplest example. Walking into 3,000 stores or 2,700 across golden branches, customer service branches and in stores we will Deploy close to 2700 cameras. Customer identification reduce friction which means faster turnaround, which means lower cost. I mean so better customer experience on one side and lower cost on the other. AI call center agent is 1/3 the cost straight. That’s the. So we at a point in time at 5,000 outbound Voice agents, that number itself we have brought down step number one in terms of optimization and two, 30% of them are now AI voice agents. That’s 1/3 of the cost rate, so line by line.
Now in terms of overall capex, first question to Sandeep is do we publish capex or we don’t? We don’t. So you know, otherwise become a new added metric and we need to publish hundreds of metrics. One more metric will get added. So please excuse us on that but we are not. But let me make a point, we are not pulling that any stocks in investing, whatever it takes in being front of the seat and center. I talked about the talent expansion. It’s not easy to get AI talent. Principally there is no call, there is no concept of AI talent. These are existing machine learning folks who are actually being trained, they’re training themselves and we are helping them with use cases to convert into AI researchers or AI talent. That’s really what we’re doing.
What they need is compute which is not that easily available. What they need is sponsorship which is not that easily available. And what they need is use cases which is not that easily available. We are delivering those three to them. So I think overall I would say and I’ll hand it over to Anurag for a moment, he’s jumping to speak that it is probably one of the most exciting part of the world that we’re doing after a long, long time. I just now hand over to Anurag for him to expand.
Anurag Chottani
Yeah. And Kuntal Rajeev covered a lot of use cases. I must also say we are parallel investing deeply on the security and the compliance infrastructure as well. So you’re aware that RBI released a free AI framework. So we have, we are, we have, we have consumed and we are in process of implementing the explainability, auditability and the transparency what the CI report talks about and parallel lot of investments going into the security architecture as well. Apart from building the new set of capabilities what Rajeev talked about
Rajeev Jain
You’ll experience as consumers on the app. Very soon AI summaries will start to appear because there are 120,000 figmas that we’ve created over the last five years. They need summarization if you simplify the conversation. So just give us three, four months and you start to see very soon. We have 71,000 employees so far. We used to train using PPTs. I’ve spent 33 years working. They’re all transitioning by end of May to copilots. They’ll all use copilots for which is NLP based infrastructure to get trained. So, that’s the level of transformation process. The process that we are actually in the process of implementing. We are not planning, we are in the process of implement.
Anurag Chottani
And just as an added point, last year we processed on peak of Diwali on a single day we processed like 600,000 loans which without AI we were like 100,000 loans. We had capacity to process only 100,000 loans on a single day. So you might see next Diwali like we’ll process close to a million loan accounts on a single day as against the numbers that I just mentioned. So — yeah.
Operator
Thank you. Next question is from the line of Viral Shah from IFL Capital. Please go ahead.
Viral Shah
Yeah hi Rajeev and Sandeep, thanks for the opportunity. I have two questions more connected to each other. So first thing is when I look at your the PCR coverage across stage one and two especially I think even versus the last quarter you have further showed it up in this quarter and correct me if I’m wrong now this is basically at almost highest levels that we have seen in our history barring the COVID periods. Do you like over here? Is there any cushion that has been built up and through the course of next year you will see some of that unwinding basically does your PCR levels remain over here next year or does it reduce?
And the connected question to this is the credit cost guidance Rajeev, you mentioned basically of 1.45 to 1.6% does this the change versus 165 to 175 basis points in the last quarter. You guided for FY27. Is this purely because of the change in the presentation of the recoveries?
Sandeep Jain
So, I think your assessment is correct versus 165 to 175 the Rajeev. Yeah, that becomes 145 to 170 because of 160 because of the change in the presentation. Your assessment is correct on that. As regard the ECL provisioning across stage one, stage two, stage three. This is a bottoms of exercise that we do every year. We are moving from yearly exercise to quarterly exercise exercise. These are bottoms of calculation done by product where we are ensuring that we remain true to the model. The idea is to focus on resiliency of the balance sheet and the provision coverage ratio. I have reason to believe the numbers should remain in this corridor. We get opportunity.
We will further up the entry on provisioning coverage ratio to ensure that we are bulletproofing the balance sheet from any kind of potential process that losses potential impact that one could witness maybe three, five, seven, ten years on the line. So resiliency and bulletproofing of the balance sheet are the two most important parameter that we also look at when we do a complete remodeling of ECL. All the places where we can identify items for making more provisions to grade cushioning. We do keep doing those activities.
Operator
Thank you. Next question is from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead.
Shubhranshu Mishra
Hi Sandeep I Rajeev two or three questions. The first one is how do we split the OPECs into cost of acquisition and cost of connections? What would be these two as a proportion of the opex? Second is in terms of risk management how many people do we have on role school for collection and how many feet on feet of the collection agencies we have. Third is when I do a back calculation basis for growth and the ROA metric, just a rough calculation the profit growth would be upwards of 35% versus a 22% growth. Is that a fair assessment? We are looking at 35, 40% kind of growth levels in profit in 2000 and 20.
Rajeev Jain
I need AI for all the three questions. They’re all three different but on a lighter vein. Sandeep?
Sandeep Jain
Yeah, so on the opex side I think the result sheet carries additional breakups in terms of expenditure that we incur. Of course the sourcing cost to the extent it is variable in nature gets accounted as EIR in the interest income line. So that’s not severally identifiable but the recovery commission and the cost that we incur for collecting money from the customers and doing DMS debt management services is shown as fees and commission expenditure separately in the. In the result sheet. I won’t repeat the number but those numbers are there for everyone to consume.
As regard the profit growth for the next year, 20 to 1, 22 to 24% growth in AUM should lead to a little better growth in profitability. Because if we are supposed to deliver operating efficiency growth of 25 to 40 that Rajeev has talked about, if we see improvement in basis point, if we see improvement in loan loss to average as a metric in the next year, even with a marginal moderation that we are talking about from NIM perspective, which is also documented as part of the assessment for next year, there is a possibility that the P and L growth may be faster for the next year than the balance sheet growth. I don’t think that I’ve done a math internally which suggests a 35% number to me. But I’ll be more than happy to be positively surprised if the number to come. As Rajesh said, we’ll probably need AI to be able to deliver that.
Rajeev Jain
But we have tailwinds. I made the point earlier. I would just make a point, Shubhranshu. We have tailwinds subject to geopolitical stability. We should, we should be in good place.
Operator
Thank you. Next question is from the land of Onkar from Shree Investments [Phonetic]. Please go ahead.
Onkar Ghugardare
So in the investor meet which you do every year, you have guided that it’s not about the question of growth but how quickly you can compound. So given the state of the current balance sheet size, you have guided for 22 to 24% for the current financial year. But like how does it like compare it with your overall long term guidance of around 17 to 19, 20% kind of growth.
Sandeep Jain
I think the long term guidance that we give at this point in time is between 22 and 24, 25% kind of corridor. And based on the current performance that we have delivered and the momentum that we see across businesses, we are reasonably confident that 20 to 24% should be achievable for next year. And I think it’s year by year, right? So long term commitment continues to remain to be anchored at 20% plus number 22, 23, 24 for the next year, 22 and 24% and then build on top of it in future.
Rajeev Jain
I just make a point that look for a 100,000 crore addition in balance sheet the growth in total or market share growth in total credit. If you take the denominator as total credit in India. So gross bank credit plus NBFC credit minus bank lending to NBFC. That’s net total credit in India. Okay. Our market share would have moved from 225 basis points to 250 basis points. You know, if India total Trade grew by 12%, we’ve grown by 22%. Okay. We should logically going to X. I would say given our relative market share, not our absolute size.
Given a relative market share, we should be as a firm aspiring to grow 2x of what the system growth is so that we can meet our ambition to be among the top five, six financial services lenders in this country over a period of next five to seven years time. So that’s the way I would approach this and we continue to approach it that way. Absolutely looks big. 100,000 crore addition market share growth, 25 basis points. So I think there is and as I said earlier, franchise has very large wallet share.
As we deliver customer centricity that I talked about in our annual investor conference on our annual investor day, we are investing very deep on customer centricity overlay on that AI transformation. Take customer centricity and AI transformation. The compounding should become easier. I would say. Okay. Actually I would say it will become easier. Okay. Rather than harder. The absolute size makes it look harder. But as we take the customer centricity which is focused on customer wallet and AI transformation, we’re doing all this to make compounding easier.
The principal compounding to me is what is the return on equity I think we continue to hold at a 100 rupee invested in us principally generates at 20, 22%. 22 rupees fixed deposits give you 7%. We are giving you 20 and we are giving that for the last 10, 11 years. And we believe that we can continue to compound shareholder value in terms of return on equity for a long period of time.
Operator
Thank you. Next question is from the line of Bharat Shah from BCS Capital Ideas [Phonetic]. Please go ahead.
Bharat Shah
Yeah. Hi Rajeev and Sandeep. Hi. Delighted to see the good results. I just had one broad question. If we see the evolution of Bajaj Finance and if we see the period prior to Covid and I draw distinction for repeated after Covid. So generally out of the four levers, the growth of the assets, the margin, the cost intensity or cost diminution and the credit cost, these four levers leading to ROA and in turn the leeway leading to roe. So if I see prior to Covid, generally every element played like a good knot in the overall symphony and therefore There was a rising crescendo.
Typically the yields and cost of the funds were managed to give typically a good or rising kind of name. The growth has always been very focused and strongly delivered vertical by vertically, business segment by segment. And therefore given good usage of technology, we delivered even the cost to metrics very efficiently over the period of time. And given our very strong discipline on credit cost management, that also played the perfect part to the sinfully, even if there was some one note out of the four notes which might be playing a little jarring, not at a particular point.
Overall, symphony in terms of return on asset and return on equity typically tended to be buoyant and in our favor. Post Covid, that equation has been a little more middling type where generally the final symphony outcome in form of ROE still is healthy by mice compared to any benchmark anyway. But compared to our own benchmark, the crescendo has not been rising, but kind of so to say, undulating one up and down type, do you think? Finally, with the AI in place, with a lot of, a lot of attenuating sectors hopefully behind us now, are we really poised in a way where all the norms kind of combine together to produce a rising crescendo rather than kind of even or at times falling crescendo that we saw instead of that on a more long term basis, we are slated for a rising crescendo.
Rajeev Jain
It’s a — okay, your observation is correct. I think first point point number two, I think pre Covid to now, Bharat, company is 4x, 115 — 140,000 crore balance sheet three and a half x we are finding 10,000 crore. That’s point number two. But through this period, the return on assets have grown. Through this period, if you take only two measures of return on assets and return on equity have remained. And I’m on panel panel 35, we were at FY19 22 and a half. We had just raised FY20, 20.2% and we remain between 19 and 20%. So that’s point two.
Now come to post Covid. Now Covid was a big shock. Shock led to post. And as an operating manager, I’m speaking post Covid, there was a massive boom. That boom we leveraged by principally expanding lines of businesses, expanding locations, very rapidly investing very deep in digital transformation. These three expanding in the process, team size, teams high ROA, high ROE. If you put ROE in FY23 went to a peak of 23.5%. You know, good times lead to what I would call and I’M being as objective fair doing my performance assessment of last five and pre Covid lead to some level of what I would call in boom cycles you take a set of decisions which necessarily are should be more calibrated is how I would respond.
I think in the last 18 months we’ve calibrated those responses. Responses okay. And to summarize the point which you should see us from here on in a reasonable cruise mode. Sandeep made a point in the passing at a design level I made that point to various investors that at 5 lakh 10 thousand crore we are by far the largest. We are a very important player in terms of even overall credit in the country. However, it’s our fiduciary responsibility to ensure we are highly resilient can take any shocks we are.
Sandeep made a point on bulletproofing the balance sheet. We will be a bulletproof business while delivering as a firm a 2022 percent ROE and a 2024% balance sheet growth. We think that we should be from here on in a lot more cruise mode. So that’s really how I would summarize my response to all the way to pre Covid. I must tell you on a more in a lighter vein I have management team sitting here as senior members of the management team. I keep reminding them FY20 I want to go back to FY20 credit cost and they. They used to laugh at me. Now they’re all delivering. The three movies six mov nine mob lower than FY20. And as I said the balance sheet is three and a half X. So I think it’s about what we decide to do rather than what happens.
I think we will decide what we want to do. We will. Last point I’ll make. We are from a what does resiliency and bulletproofing proofing means that the profit growth principally should be higher than balance sheet growth. And every incremental dollar of the differential in terms of growth goes to strengthening the balance sheet. Because we’re just living in continuous crisis. I mean let me spend one moment one year three crisis. We started the year we all have short memory. We started last year with Indo Pakistan war for four days.
We had tariff for four five months and we had February March full March of Iran US war. How does one model that? And we have continued to still be operating manager. We have to remain open for business. So the best way is to just keep bullet proofing the business. It needs tremendous agility I would say for all firms, for all operating managers tremendous agility. Because this is the environment that we are, we have to all become used to living in. And our management team here, we are committed to do that. I hope that gives you and we can do a side conversation longer one.
Operator
Thank you very much. Ladies and gentlemen, we will take that as a last question. I’ll now hand the conference over to Mr. Ajit Kumar for closing comments.
Ajit Kumar
Thank you, Rajeev, Sandeep, and Bajaj Finance Team. Do you want to make any closing comments before you conclude?
Rajeev Jain
No. Thank you is the only closing comment. Thank you. Wish us luck. Wish the world luck. Thank you. Thank you all.
Operator
Thank you very much. On behalf of JM Financial Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.