Bajaj Finance Ltd (BAJFINANCE) Q4 FY23 Earnings Concall Transcript

Bajaj Finance Ltd (NSE:BAJFINANCE) Q4 FY23 Earnings Concall dated Apr. 26, 2023.

Corporate Participants:

Rajeev Jain — Managing Director

Sandeep Jain — Chief Financial Officer

Atul Jain — Managing Director

Analysts:

Sameer Bhise — JM Financial Ltd — Analyst

Kunal Shah — Citigroup — Analyst

Sandeep Jain — Chief Financial Officer

Dhaval Gada — DSP Mutual Fund — Analyst

Mahrukh Adajania — Nuvama — Analyst

Umang Shah — Kotak Mutual Fund — Analyst

Saurabh Kumar — JPMorgan — Analyst

Bhuvnesh Garg — Investec Capital — Analyst

Avinash Singh — Emkay Global — Analyst

Prakhar Sharma — Jefferies India — Analyst

Abhijit Tibrewal — Motilal Oswal — Analyst

Piran Engineer — CLSA India — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Bajaj Finance Limited Q4 FY’23 Earnings Conference Call, hosted by JM Financial. [Operator Instructions].

I now hand the conference over to Mr. Samir, from JM Financial. Thank you, and over to you, sir.

Sameer Bhise — JM Financial Ltd — Analyst

Thank you, Neerav [Phonetic]. Good evening, everyone, and welcome to the 4Q FY’23 earnings conference call of Bajaj Finance Limited. First of all, I would like to thank the management of Bajaj Finance for giving us the opportunity to host this call. From the management team, we have Mr. Rajeev Jain, Managing Director, Bajaj Finance; Mr. Sandeep Jain, Chief Financial Officer of Bajaj Finance and the entire Senior Management team of Bajaj Finance and its subsidiaries.

Without much ado, I would want to hand over this floor to Mr. Rajeev Jain for his opening comments. Over to you, sir. Thank you.

Rajeev Jain — Managing Director

Thank you, Samir. Thank you, JM, for hosting this. Very good evening to all of you. I have set of my colleagues here. Good evening from them as well. I’ll essentially be taking you through very quickly over the next 15 minutes, through the investor deck, which we uploaded on the Investor section of the website, and also filed with BSE and NSE. So let’s just quickly jump over to the investor deck.

Let’s jump over to Panel number four quickly. Quarterly, I would say excellent quarter across all financial, and portfolio metrics. We delivered INR16,500 crores of core AUM growth. We added a tad below 3.1 million new customers to the franchise in Q4. All products and services are now live on webinar platform, which is really what the work that we’ve been at over the last 2.5 years. Ad platform alone has 35.5 million net users, we had gross installs of 54-odd million last year, and as of 31 March, the net installs of 35.5 million. We were amongst the largest — global largest in the finance place on Google Play Store, among the top four organic downloads in the world, so I think that’s been the effort that’s been made by the company to fully go digital.

In terms of financial metrics core AUM grew 29% to 247,000 crores. Opex to NIM, last quarter came in at 34.1% very close, again came in at 34.1%. PAT, it’s ever high PAT of INR3,158 crores, growth of 30% in Q4. ROE just a tad below 24% at 23.94% net and — gross NPA, it’s the lowest ever in the history of the company. I mean, for — I mean and if you adjust this to one 180 days past-due and so on and so forth, I think, these numbers are ever low numbers. Net NPA, came in at 34 basis points, ending March ’23. Very quickly on full-year, given that it’s the fourth quarter, excellent year overall across all financial and portfolio metric.

We delivered core AUM growth of INR55,292 crores. We had guided for INR52,000 crores to INR53,000 crores of AUM growth in the beginning of the year. And we disbursed 29.6 million loans. We added 11.6 million new customers to the franchise, the highest-ever customer addition that we’ve actually done ever as a company. As earlier mentioned, fully live on App and Web, 35.5 million consumers on the App platform. Now, overall in general, given the exit momentum of AUM growth, robust portfolio metrics, as you will see as I take you through on a highly-scalable digital stat, we are pretty confident of our growth and portfolio metrics for FY’24. In terms of core AUM growth, full-year I talked about 29%, opex to NIM full-year came in at 35.1%. PAT came in at INR11,508 crores, a growth of 64%. ROE full-year came in at 23.46%, and net NPA of course, as of March 31, is at 34 basis points.

Let us quickly jump to some key points on Panel 5. Overall, B2B disbursements were up 21%, you’re seeing data coming through on how mobile phones are de-growing by 20%, how shipments are going down, in mind you out of B2B disbursements that we do anywhere between 40% and 45% at maybe little more, are essentially digital products or mobile phones. In that environment growing 21%, I would say demonstrates strength of the franchise and the distribution. So far as you look at having entered the year, so far April we are tracking reasonably strong. In terms of customer franchise, I talked about 3.09 million customers. We’re reasonably confident we should be able to add 11 million to 12 million new customers in FY’24 as well, depending on how the first half growth, we’ll see if there is a upside to that.

Our overall customer franchise stood at 69.14 million, our cross-sell franchise for the first time crossed 40 million at 40.56 million. We added 19 locations through, and ended the year at 3,733 locations. Overall in the year, we added 230 new locations, we are adding 150 — most of my location footprint is front-loaded, so we are adding 150-odd are new locations and over 300 standalone gold loan branches in Q1 alone, as we drive us through Q1. Our liquidity buffer, pretty strong at just a tad below INR12,000 crores.

Important point on Panel 7. NII grew 28%, opex to NIM came in at 34.1%, Q4 was 34.5% so continues its downward trajectory. We had articulated last quarter — no, sorry, last year it was 34.5%? — Q3 was? I think, it’s 34.5% [Phonetic]. Anyway, we continue to invest, investing in Social and Rewards, two key platforms. Rewards will go live sometime in between Q3 and Q4, Social will realize sometime in Q1, FY’25. Our employee headcount stood at 43,147. In terms of credit cost, a fully normalized loan losses and provisions now. In terms of — came in at under INR860 crores.

We continue to hold management overlay of INR960-odd crores. GNPA as I said, came in at lowest ever at 94 basis points, net NPA 34 basis points. Just go back, sorry. All portfolios across 11 portfolios that we published are all green, including our Auto Finance portfolio, which is despite not being an ever high AUM, a peak AUM was 15,500 crore. It’s still at a tad below 13,000 crore, 93.28% of the portfolio is current. I’ve not seen that number in last 16 years. A peak number used to be 89%-90% only.

In terms of profitability on Pane 8 very quickly, capital adequacy remains quite strong. I’ve already talked — ROE I talked about, ROA in Q4 came in just a 3 basis points, if I’m not mistaken below Q3. So Q3 was 5.43, Q4 has come in at 5.4%. Our capital adequacy pretty strong, both BHFL and BFL remained very well-capitalized from a Tier-1 capital standpoint. Tier-1 capital for was — for BFL was 23.2%, BHFL had a very good quarter overall, AUM was up 30%, just at INR69,228 crores. Home loans grew 24%, you’re all watching how there is a slowing growth in the home loan industry, given the two years of rapid growth. And the Loan Against Property grew 4%, LRD on a — grew 64%, and Developer Finance grew by 92%, albeit on a lower base.

And as you see below that, DF book is essentially 9% of the book. DF book from a model standpoint in terms of portfolio composition, as I’ve said in the past, when we model our business on leading companies principally will anchor around between 12% and 14%, that’s really where it will “get capped at” from a portfolio composition standpoint, and 60% anyway has to be home loan model as part of a principal business criteria, as outlined by management. Overall approvals in Q4 grew by 21% for BHFL.

Very quickly, operating efficiencies. Net interest income for BHFL grew 40%. Opex to NII stood at 26.5% versus a year ago of 32.5%. Our GNPA and NNPA continues to — they contributes — they continue to play their role in ensuring from some of our strategy standpoint, that we continue to deliver a rock-solid asset quality at 22 basis points at INR70,000 crores as you can see. Actually, and 8 basis points is one of the lowest in the industry, if not the lowest in the industry.

Panel 10, just a single point. For BHFL, profit before tax grew 52%, profit after tax grew by 53%, profit — to INR302 crores in the quarter gone by. Bajaj Financial Securities not a material subsidiary at this point in time, we continue to invest in building out the HNI broking business, continue to building out launching new App features. We added 42,000 customers, and overall franchise crossed 0.5 million mark.

Let’s quickly jump to on a full-year basis very quickly, given its fourth quarter, I talked about on Panel 12. Core AUM up 29%, new loans I talked about on a full-year basis grew 20% to 29.6 million. Customer franchise also grew 20% to 69 million. Net interest income I talked about grew 32%. The Board of Directors at the meeting that just concluded, today have recommended a dividend of INR30 per equity share and 1500% dividend for FY’23, amounts to 17.65% of standalone profit for FY’23, and is completely in line with the Company’s dividend distribution policy that’s been outlined and improved. So the Company has recommended, the Board of Directors have recommended a dividend of INR30 per equity share of 1500%.

Very quickly on to Panel 15, an important point. I’m [Technical Issue] we’ve gone, this is some of the omnipresence strategy update. Our platform has fully gone digital across all products and services. It’s going-live in a staggered release manner. Some people may be able to see some of them, some people will not be able to see. It’s just going-live on Android, and based on the staggered methodology should fully happen by the 30 of April at 50%. 50% would be 31 of April by. And by 15 of May, should have gone live 100%. “Web=App” we are on-track at a design level, what is visible in App will be visible is visible in — is visible in — will be visible fully in Web by 29th of April.

We published as a metrics last year from App platform standpoint to demonstrate that how important and strategic it is, for our business going digital is. The same thing from Q2 onwards, we will do for Web as well. We will publish a set of Web metrics that we’ll start to populate every quarter from Q2 onwards, we will just wait for the platform to stabilize in Q1, and start to publish the matrix metrics form Q2. Going forward all features that go live on App will also go live on Web, on the same day that it goes live on App. That was really the original objective as we outlined in December ’21, when we talked about “App=Web” strategy.

Payments, a lots of action in payments. A scalable UP infrastructure has gone live on consumer App platform, it’s scaling pretty well. Will improve — will help improve performance significantly, I would say. New features like Contact Mapper capability, UPI auto pay functionality is going live, iOS will go live in end of April as well. In Q1, lots of action continues to happen. We continue to invest in the payments business. A new Payments CLP, refer and earn functionality, a faster settlement for merchants is going-live, Checkout Page for — on PG providers will start to become visible. Bajaj Pay Wallet will start to become visible on checkout page of leading payment gateway providers.

QR deployment, I think we went live with merchant QR in November. We started to accelerate QR deployment from December onwards. I think company has made massive strides on QR deployment. In the last quarter alone, we deployed 413,000 merchant QR. We estimate based on where is report that India has 30 million — 31 million, 32 million overall merchant QRs. We principally think anywhere between 2.1 million to 2.5 million QRs, merchant QRs of Bajaj Pay you deploy in FY ’24. So we are accelerating the deployment of QR that’s really the goal of FY ’24 for us as a company.

We will also go live, we start to complete the stack further. The Bajaj Pay EDC machines will also go live in Q1 FY ’24, with features like merchant onboarding, merchant — these are benchmark metrics or features that will start to go live. This MVP 1 going live in June and MVP 2 going live in September. Between these two, we should have reasonably, well benchmark products. It start with existing customer — existing distribution partners. And we’ll go open architecture fully by September, October. And we’re quite excited about taking the entire stack of payments having worked on this for last two years to our merchant ecosystem of 133,000 merchants. And also do open architecture.

Very quickly, these are some of the metrics on 17, 18. And I think, I mean — largely agreeing on most of the metrics or Panel 17, 18, that you can observe. Panel 19 is an important panel. This is a panel that we started to publish on customer franchise, key financial metrics, because at the end of the day the franchise is growing, is it leading to AUM per customer franchise is growing or not. And is the path for franchise per cross-sell franchise growing or not. We delivered a record number as you can see, these are seven-year numbers right here from FY ’17 to FY ’23, from INR1,670 per cross-sell franchise profit. We’ve ended the year at INR2,837. As you can see ’17, ’18, ’19, they were normal years, even ’20 was a normal year barring last 10. Even on those four years, since then we are principally looking at just 70%, 80% growth in profit per customer franchise. And AUM per customer franchise has remained pretty steady. We don’t expect any change in this metric to happen. We should continue to deliver better outcomes as we go from here.

Let’s quickly jump to Panel 37. This is financials, 29% core asset management — assets under management growth. Total income grew 32%. Net interest income grew 28%, operating expenses grew 27%, loan losses grew 22% and profits grew 31%. So started to now largely look at a normalized frame of 28%, 27%, losses growing — loan losses growing 22% and profits growing 30%. On a full year basis, core assets grew 29% and total income grew 31%, NII grew 32%, loan losses grew — de-grew 34%, and as a result profits grew 64%. The ratios are here below, I’ve talked about on a full year basis ROE came in at 5.31% and operating expenses to net interest income came in at 35.1%. ROE came in at 23.5%, as I mentioned earlier.

Let’s quickly jump to cross-sell franchise, Panel 48, 14.5 million customers. You can see below, we started Q1 with 2.73 million customers, went to 2.61 million, went to 3.14 million. And normally Q1 and Q3 are peak quarters, that’s really how we observe over many years now, at least in the last four years, five years. So anyway, we were just a tad below Q3, which is normally a peak quarter and came in at 3.1 million new customers added to the franchise in Q4. So gives us reasonable confidence that we can maintain a 11 million to 12 million customer franchise growth in — I mean, I do dream of a day and someday we will have 100 million of new customers for us as a company sometime in the near term.

Let’s quickly jump to Panel 52, this is the mix identical. That’s one word for it. Two-wheeler and three-wheeler, 5% a year ago, 5%; urban sales finance, 8%, 7%; urban B2C, 20%, 20%; rural 2%, 2%; 8%, 8%; 13% is 14%; and loan against securities was 7%, with that 2% as you — that shares the difference between core and otherwise is, which had a residual number is at 6%; commercial lending 6 — 7%; and mortgages 31%. We don’t expect — as I’ve said multiple times, we don’t expect these — this product mix to change in any given manner. And we think we can continue to comfortably grow, while maintaining this mix, plus minus 1 — 2, will be a big number given our size of LNG, 1% plus minus is possible.

Just last panel, in terms of provisioning coverage, Panel 55. Overall, GNPA two-wheeler is now down to 4.79%, rest of the numbers are all in SME lending, you see 1.24%, rest are all below 1%. In terms of net NPA two-wheeler and three-wheeler finance, 2.43% and rest are sub 25 basis points, as you can see. And that’s how we came in at 94 basis points and 34 basis points. From a year ago, which was 1.6% and 68 basis points to 94 basis points and 34 basis points. So, overall in a pretty strong position from a portfolio quality standpoint.

Just last panel on Stagewise ECL. I mean, as you can see here this as of 31st of March, we are on 64% PCR on Stage 3; on Stage 2 at 31% as you can see; and Stage 1 is at 80 basis points. So pretty well positioned and strongly placed. That’s really the quarter. On portfolio metrics nothing to talk about. We’re all at what I would call ever high numbers. So whatever best number that I’ve seen in a long, long time. So, that’s the quarter gone by. Happy to take questions between me and the management team.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Kunal Shah from Citigroup. Please go ahead.

Kunal Shah — Citigroup — Analyst

Yeah. Hi, Rajeev. So a couple of questions, firstly, with respect to this entire annual charges, this the document which came in from RBI. So what is the kind of a impact in terms of how we see capitalization of annual charges happening and how much could be less with the portion of panel interest versus panel targets for us?

Rajeev Jain — Managing Director

Yeah. So Kunal, first thing first, we don’t capitalize charges into the loan account of the customer. So we are largely unimpacted by the RBI regulation. Of course, it is in draft format at this point in time, we will await final guidelines from RBI. That’s one.

Second, I think the bigger consideration that is coming out in the guideline is that, is the charges being considered for profiteering? Very clearly the P&L and balance charges that we get from the customers are lower than the commission or recovery cost that we incur for collecting the EMI. This is not for profiteering, the charges that we collect are basically to take care of the cost that we incur for collecting the instalments.

Sandeep Jain — Chief Financial Officer

We also benchmark these fees and charges with regard to the industry and on an ongoing basis and adjust them suitably if you find any areas of improvement or opportunity.

Kunal Shah — Citigroup — Analyst

Okay. And maybe it should not be limited by paying interest, so that definitely is not there as far as it is concerned.

Rajeev Jain — Managing Director

That’s correct, yes.

Kunal Shah — Citigroup — Analyst

Okay. And overall in terms of the annual charges in the other income, what could be the overall proportion of it, if you can quantify that?

Rajeev Jain — Managing Director

Yeah. Kunal, we do disclose as part of the annual report, the breakup of fees and charges into service admin charges, distribution income, fees and value add [Technical Issues]. These service admin charges of a decent contribution of service and admin fees is from P&L and bounce charges.

Kunal Shah — Citigroup — Analyst

Okay. So this service and admin, it should be largely [Technical Issues].

Rajeev Jain — Managing Director

Yeah. A large portion of that would be P&L and bounce charges. That’s correct.

Kunal Shah — Citigroup — Analyst

Sure. Okay.

Rajeev Jain — Managing Director

But mind you in the — we were saying, it is corresponding number in recovery commission that’s sitting in the expense line. That’s the point we were earlier making and both are published.

Kunal Shah — Citigroup — Analyst

Yeah. Okay. And secondly, Rajeev, maybe compared to last time in terms of indicating with respect to competitive intensity as well as focus on margins vis-a-vis degrowth, we don’t see that commentary same distance. So anything which you are seeing at the ground level? Or are we more confident in terms of say, growth going forward? How should we look at that, yeah?

Rajeev Jain — Managing Director

India banking is now retail banking. So principally then everybody is competing with everybody. So then what is there to talk about competitive intensity? That’s why removed it. So your observation is correct. I mean, if wholesale is growing at 5%, then the only thing that’s growing is retail. So, I think — so that’s one part.

Overall, in general, when I’m looking at the bureau data, in terms of disbursements, overall consumer credit growth metrics are looking very, very strong. So as I said, India grade [Phonetic] market is increasingly looking more and more retail. So those were the franchise those who understand risk should — and those who have the products to sell to consumers. And those who can keep them engaged through various digital channels should win. I think that’s principally the orientation.

The only point I would make, when I look at the overall unsecured AUM, overall engine, we think our market share is between 7% and 8%. The opportunity remains pretty large. But given the rapid growth of personal loans disbursement by host of players who not seen a cycle, I worry a little bit about it, because I never want to forget that PL principally in the risk business. And it’s not a balance sheet business. It is principally a risk business. So that’s the only other additional observation point I would make.

So growth is strong, momentum is good, strong across product lines. India is — India banking is mostly retail and unsecured is growing simply [Phonetic] the fastest. I’m not talking credit cards here, I’m talking about unsecured PL here. So, I would just worry about, because those who have seen cycles are probably would be more mature about [Phonetic] than others.

Kunal Shah — Citigroup — Analyst

Okay. Yeah.

Rajeev Jain — Managing Director

We won’t see that sentence anymore. Until this time — just on a lighter vein, until this time India banking goes back to a more balanced mix of retail and wholesale.

Kunal Shah — Citigroup — Analyst

And margin recovery growth, in terms of balancing that out? So we have a trust in that, but —

Rajeev Jain — Managing Director

So you can see Q4, I mean rates have been going up, given our strong ALM that we will continue to manage with company and a diversified balance sheet profile. Actually, if you look at full year, there is no impact of interest rate hikes on NIM in FY ’23. I think that’s a factual point now. Do we expect gradual moderation in margins in FY ’24? The answer is, yes. But it’s — if you assume one more rate hikes, we expect NIM moderation of 40 basis points to 50 basis points on a full year basis. That’s really what our — and this is including one more rate hike. And mind you, part of it will get mitigated, if vertical, overall P&L view by picking of opex metrics, best ever credit metrics will partially mitigate that frame as well. So, it really — it should overall have low impact on ROE and ROE profile as we get into FY ’24, is really how we are seeing things to be.

Kunal Shah — Citigroup — Analyst

Okay, great, great. Thanks, and all the best, yeah.

Operator

Thank you. The next question is from the line of Dhaval from DSP Mutual Fund. Please go ahead.

Dhaval Gada — DSP Mutual Fund — Analyst

Yeah. Hi, Rajeev. Congrats on the strong performance. I just had couple of questions. First was relating to customer acquisition. So I observed that, since third quarter we’ve seen significant pickup, especially on physical acquisition, in terms [Phonetic] by and large has been steady around the 600,000 mark. So just wanted to understand, if you’ve made any major changes on the risk any new product which is guiding this acquisition engine? If you could just talk a little bit around that. And the outlook for next year, I think you sort of constantly revised the guidance on customer acquisition as you’ve got confidence on the [indecipherable] physical piece. How do you think about the next couple of years in terms of new customer additions? So that’s the first question. [Speech Overlap]

Rajeev Jain — Managing Director

No, no. It’s a very fair question. See in the last 120 odd days, we’ve looked at capacity planning lot more closely. Of course, geographic expansion happens as it happens, because as we mind you, we’ve been running through pandemic. It’s been one action go forward, one action going back. I think at a design level, that’s really how through last three years have been.

In the last 120 days as things start to look up and a full normalization seem to fully revert. Not, I don’t mean just in pandemic. As we started to have greater control over the P&L, we looked at the capacity planning across our businesses, more so in sales finance part of our business and have significantly ramped up our staffing both at the stores and in terms of people who manage them, from — all the way from one to 3,700 cities in India. That starting to in the last 60 days, 75 days yield significant results.

Operator

Sorry to interrupt, Dhaval, I request to all the participants please restrict to two questions per participant. Dhaval, go ahead.

Dhaval Gada — DSP Mutual Fund — Analyst

Yeah, sure. Okay. Thanks.

Rajeev Jain — Managing Director

That’s really — almost there, Dhaval, we do see — we should be able to dispense 35-odd million loans in FY ’24, that would be a reasonable metric for us to — which will be at 20% growth. So it’s not like — but we do see that number move.

Dhaval Gada — DSP Mutual Fund — Analyst

Got it. And the second question is upon the sort of in term profitability.

Rajeev Jain — Managing Director

I talked about it earlier, Dhaval, that we do see some level of moderation, I made that point, right. I mean, see, we want to protect profitability, because at the end of the day through COVID, that’s one of the things that protected the company, and all its constituents. So we expect NIM moderation of 40 basis points, 50 basis points, as I said earlier. But as I’ve said, opex metrics have already peaked. Opex to NIM is at 34.1%. Should look anywhere between 33.7% to 34% on a full year basis next year. That’s really what we are looking at. Credit metrics hold. They are looking strong. So net impact on ROA and ROE should be reasonably low.

Dhaval Gada — DSP Mutual Fund — Analyst

Got it. [Technical Issues]

Rajeev Jain — Managing Director

I lost you. We’re not able to hear you.

Operator

Dhaval, sorry to interrupt you, your voice is breaking.

Dhaval Gada — DSP Mutual Fund — Analyst

Sorry, I was just saying, wish you all the very best for next year. Thanks.

Rajeev Jain — Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Mahrukh Adajania from Nuvama. Please go ahead.

Mahrukh Adajania — Nuvama — Analyst

Yeah. Hello, I just had two questions. The first one was that, yesterday Bajaj Auto announced that they had applied for an NBFC license. So any impact on your business from that? That’s the first question.

Rajeev Jain — Managing Director

It’s 5% of our balance sheet today, which is essentially captive. You are aware we’ve started open architecture two-wheeler financing. So this was announced not yesterday, this was actually announced a year odd ago. Bajaj Auto had also announced then, that they’re applying for a NBFC license. I think they have applied for one. So that’s also in public domain. And as they get the license they set it up, they’ll decide how to go about, how much do they want to book the business here and so on and so forth. But it’s in a 24-month horizon, I would see we should expect no change, but we’ll see.

Second order, we are building our own open architecture two-wheeler financing business. We expect we launched that business in June, July. We expect that business to be 250,000 to 300,000 two-wheeler loans non-Bajaj Auto in the current fiscal. So we’re now already clocking anywhere between 11,000 to 13,000 new accounts every month, and it’s a staggered rollout. We for the first six months did not rollout in many cities. Having gained confidence we are now accelerating the pace a little bit and foresee 250,000 to 300,000 open architecture accounts. So that’s really how we see.

Yeah. Sandeep, do you want to say something? Sandeep had a point.

Sandeep Jain — Chief Financial Officer

So, Mahrukh, I think, we move a significant volume for Bajaj Auto. I think, we remain a large partner for them. We continue to work with them in that spirit. Post the RBI license to run their own NBFC, they can decide what — they deem appropriate for their company. We continue to run the business.

Mahrukh Adajania — Nuvama — Analyst

Thanks a lot. My next question, you probably answered it, Rajeev. But my next question is that most NBFCs and banks are bullish on demand for FY ’24, whereas a lot of market participants are a little worried about the high base and a possible slowdown. So what is your view?

Rajeev Jain — Managing Director

So I mean, I can — one, I think India seems well placed to grow at 6% rather. I mean, so I think that’s point number one. As I said earlier, overall consumer credit growth seems quite strong. I mean, if you look at some of the bureau data, that we’re tracking on a three-year pattern standpoint, the numbers look very, very strong. As I said earlier, in some of those segments, it’s my personal view, in order — when I see that level of growth that worries me a little, but that’s what each company do manage its own risk and play.

We do — our view would be, if we could — given our exit momentum, we principally think given the best ever portfolio metrics, strong customer acquisition engine, a strong AUM growth, exit rate that we delivered and a scalable app and web digital stack, we shouldn’t be able to grow anywhere between 28%, 29% on a consolidated basis with a equally sharp focus on profitability in FY ’24 as well.

Mahrukh Adajania — Nuvama — Analyst

Okay. Thanks a lot. Thank you.

Rajeev Jain — Managing Director

Thank you.

Operator

Thank you. Next question is from the line of Umang Shah from Kotak Mutual Fund. Please go ahead.

Umang Shah — Kotak Mutual Fund — Analyst

Yeah. Hi, thanks for taking my question and congratulations to Rajeev —

Operator

Umang, sorry to interrupt you. But we are losing your audio. May I request you to come in a better reception area please?

Umang Shah — Kotak Mutual Fund — Analyst

Yes. Am I audible now?

Operator

I can hear you, but your voice is still breaking slightly.

Umang Shah — Kotak Mutual Fund — Analyst

Yeah. I’ll just repeat. Two questions that I have. First is on the leadership transition. So with Anup and Rakesh onboard with — on the Board in their new roles, is there any change in terms of roles and responsibilities between yourselves and the senior leadership team, if at all?

Rajeev Jain — Managing Director

The answer is, no. I mean, if you look principally, the reason for appointment of the two senior colleagues of mine on the Board, as the company grows larger and work towards delivering its long-range strategy, we have to continue to — we must as a company continue to augment the bench. And as a result, the company onboarded both of them who are Deputy CEOs of the company doing very large roles as Board members. They bring vast business experience and which should really help the company as it continues to grow from here on. So that was the objective of they’re moving as Board members, as Executive Director.

Umang Shah — Kotak Mutual Fund — Analyst

Understood. Perfect. The second question that I have is on the asset mix. So FY ’23 as you already spoke during your initial comments, AUM mix hasn’t really changed much. Our portfolio metrics are looking really great. And I think you also have a closer to about thousand odd crores of management overlay, which is sitting on the balance sheet. Then in that case, given that you’re talking about some NIM pressures. Is it possible that we may see the strength of the balance sheet shifting more in favor of riskier or unsecured assets? So we are targeting for maintaining similar sort of asset mix?

Rajeev Jain — Managing Director

No, this is a mix. This is a mix, plus-minus as I said 1%. It’s also hard to change this mix. INR2,50,000 crore, I can’t shift this mix unless and until — and there is no unless and until. I can’t shift the mix. And we like this mix. I think it delivers optimal outcomes from a risk management and scalability standpoint. So, plus-minus 1% is really how it’s likely to change. It will not only just two years, I mean, if you go back even to 2020, the number was 32%, 33%, let’s say we take mortgages as an example. So these numbers are largely have been in the corridor, even ’19, ’20, if I look at it. So not likely to change, Umang.

Umang Shah — Kotak Mutual Fund — Analyst

Understood. Perfect. Great. Thank you so much and wish you good luck. Thanks.

Rajeev Jain — Managing Director

Thank you.

Operator

Thank you. Next question is from the line of Saurabh Kumar from JPMorgan. Please go ahead.

Saurabh Kumar — JPMorgan — Analyst

Hi, sir. There are two questions. One is, what could be — how is your market share in subvention fee, I think right now, basically in the people finance. And the second is in terms of credit filters, I mean, relative to your own history where will you be? Will your credit filters now be below the 2018 level? Or if you can get some sort of your comments on that? Thank you.

Rajeev Jain — Managing Director

Both are fair questions. I mean, at a design level, we are a market leader by a wide margin, you know that. So I don’t have to tell you, intend to remain. So the earlier point that I made to one of the questions that we’ve augmented are B2B infrastructure, significantly given we are seeing stability. So we are likely to see that market share growth is really what our view is. Given the investments in the last 90 days you made on staffing. So the market share number, if you go by value it would be upwards of 50%, okay, by value.

Volume; volume, we make a set of choices, because we have to deliver growth and profitability. We make a set of choices and those choices were very clear about, that they’re made to ensure we make per unit economic profit. If you don’t make per unit economic profit, which meets a threshold irrespective of what our competition is doing, we will not do. And I still said, we’re still — we foresee that we should grow volume itself by 20% in the next fiscal. So that’s what our view on point of sale business is, Saurabh.

In terms of risk filters, at a design level, we were very, very tight over the last three years. As I said earlier, you know that, we all now looking at pandemic in hindsight. But benefit of hindsight is you’re out of it also, right. I mean, we were very, very tight over the last three years. As you’ve seen data flow, based on data, by market, by line of business, we take decisions. So there is no answer that I have a lose stand or I have a risky stand. So it’s data determined. Whatever the data says is how we run our business and we intend to continue to do so.

Sandeep is just telling me that, so that people don’t mistake, we used to say, that our subvention market share was used to be 67%, 68%. Our reasonable estimate is between 60% to 65%. And I would say, it’s very likely in FY ’24, it will go back to that level, definitely in terms of value. So he is just saying, so that the metric is not confused with. And that was a value market share in terms of disbursement, the 50% number — upwards of 50% number that I talked about. This is subvention market share.

Saurabh Kumar — JPMorgan — Analyst

Perfect. [indecipherable] Thank you.

Rajeev Jain — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Bhuvnesh Garg from Investec Capital. Please go ahead.

Bhuvnesh Garg — Investec Capital — Analyst

Yeah. Hello. Thank you for the opportunity. Just a data keeping question. So sir, what could be the number of active customers as on March ’23, basically the customers who are currently in active loan and paying payment [Speech Overlap]

Rajeev Jain — Managing Director

We’re banking 30 million customers currently.

Bhuvnesh Garg — Investec Capital — Analyst

Sorry?

Rajeev Jain — Managing Director

We’re banking 30 million customers currently.

Sandeep Jain — Chief Financial Officer

Every month.

Rajeev Jain — Managing Director

Yes.

Bhuvnesh Garg — Investec Capital — Analyst

Okay.

Rajeev Jain — Managing Director

We have 18 million, 19 million MAUs on the digital app platform, but the real — banking number is real and material.

Bhuvnesh Garg — Investec Capital — Analyst

Okay. Thank you. That’s it.

Operator

Thank you. The next question is from the line of Abhishek from HSBC. Please go ahead. Abhishek, may I request you to unmute your line from your side and go ahead with your question, please. Getting no response. We move onto the next participant.

The next question is from the line of Avinash Singh from Emkay Global. Please go ahead.

Avinash Singh — Emkay Global — Analyst

Yeah. Hi, thanks for the opportunity. Couple of questions. Well, first, again, you have explained in details, but now considering that your customer franchise is almost closer to a third of the entire sort of a bureau, a data base count. Now from here onwards, I mean, you are still expecting kind of a close to 16% [Phonetic], 17% [Phonetic] growths in the franchisee annually. I mean, do you expect, I mean, you to continue to sort of increase the penetration in the current bureau database customers? Are you expecting this — the so called loan-level customer of the bureau database, it’s safe to go [indecipherable]. So that’s number one.

Second, just in terms of your experience, are you seeing some kind of a slowdown in mortgages in this kind of a high rate environment in the current going month. I mean, what’s your sort of reading — early reading for FY’24 mortgage in? So we have only two question. Thank you.

Rajeev Jain — Managing Director

So, I’ll — in general, our experiences for the new customers that we’re bringing onboard between 60% and 65% of the bureau score of 750 and rest 30%, 35% are new to credit. That’s our — in general multi-year track record. That’s our experience. That’s empirical experience over the last many, many years. That is not changed even in FY ’23. So, I think there remains a lot of room, is the only point I would make.

On home loan demand, Atul is the right person to appoint, but I’ll just say that, I think clearly higher interest rates and high inflation in general lead to slower mortgage demand. I think so there is no — I’m only making a point that is known for the last many decades. It just flows through at a cascading level into the sector. So I think that’s the only point I would make. We grew 24% in the quarter that went by on a full year basis grew 30%. Our size remains small, Atul can handle.

Atul Jain — Managing Director

Hey. So as far as home loan is concerned, what we have seen in last two quarters towards — in the affordable segment. Affordable segment when we say, I don’t mean affordable as per EWS definition, but let us say INR50 lakhs kind of a unit. We have seen a slowness in uptick, because as a higher interest rates and the inflation, I think that’s baked into some path. But the overall demand still remains strong. Overall home sales remains strong. Inventory at an industry level, I think is all time low. In few markets it is even less than 12 months, which is there and the luxury demand in the upper premium segment, demand remains very strong, that’s what we’ll say. So in FY ’24, as of now, we don’t see a major demand compression. If I have to say, my view, our — the way we are looking at the market.

Rajeev Jain — Managing Director

And I’ll just add to what Atul said, our overall size remains small, aggregate balance sheet at INR77,000 crore, aggregate INR69,000 crore [Phonetic] there and another INR7,000 residual value share, INR78,000 crores. So we have a lot of headroom to grow even if the growth is slowing down.

Avinash Singh — Emkay Global — Analyst

Thank you.

Operator

Thank you. The next question is from the line of Prakhar [Phonetic] Sharma from Jefferies India. Please go ahead.

Prakhar Sharma — Jefferies India — Analyst

Thank you. Rajeev, just two questions. One from a slightly longer-term perspective.

Sandeep Jain — Chief Financial Officer

We didn’t hear your name.

Prakhar Sharma — Jefferies India — Analyst

Prakhar. Sandeep, Prakhar here.

Sandeep Jain — Chief Financial Officer

Yeah.

Prakhar Sharma — Jefferies India — Analyst

Sorry. So just wanted to check on two things. One is on the upcoming announcements around one of the large corporates Reliance Group trying to foray into this company into the segment. I know hardly anything is known, but from your perspective, Rajeev, how do you prepare Bajaj Finance for something which can be intense? We don’t know, but things — how do you prepare within the information that you have? That is the first thing. And I’ll have a small data question after that.

Rajeev Jain — Managing Director

Yeah. I won’t like to comment on competition that’s why number one, I would make. India represents tremendous — very large opportunity for long-term growth in financial services. What is in my control is that, I would work — instead work towards realizing our ambition of 100 million consumers, which is really the ambition that you’ve outlined and take a disproportionate share of these 100 million consumers payments and financial services products and services, with a laser sharp focus I would say on frictionless experience. That’s really what I will do. Opportunity remains very large and we compete today with those who have been in this business for decades and decades and it’s a highly competitive industry. So that’s really what I would say, Prakhar to you.

Prakhar Sharma — Jefferies India — Analyst

Got it. And just one small clarification, if you can make on this margin trajectory and cost and maybe it’s neutral at an aggregate level. But just to understand the margin lever more, so this 30 basis point, 40 basis point readjustment that we could see between FY ’23 and ’24. Is it contingent upon another rate hike? Or it would nevertheless happen? And we would probably still have only a little bit impact on ROE and nothing more than that? So, if you can clarify that part.

Sandeep Jain — Chief Financial Officer

Yeah. So Prakhar, 40 basis point to 50 basis point compression that Rajeev referred to does factor in potential one increased by RBI. So it does take into that consideration. That’s point number one. Point number two is, again Rajeev had clarified that, we don’t expect a significant impact on the ROA and ROE for the company. I think opex to NIM, which is currently at over 35% for the current year, we are expecting it to be below 34% [Phonetic] in the next FY ’24. That should give us some savings. Overall impact to ROA could be 5 basis point, 10 basis point, 15 basis point on mix.

Prakhar Sharma — Jefferies India — Analyst

Perfect. Thank you so much.

Rajeev Jain — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.

Abhijit Tibrewal — Motilal Oswal — Analyst

Yes, thank you for taking my question. My first question is, in the last quarter when we articulated our long-range strategy two [Phonetic] segments that we are kind of looking to enter, NFI, vehicle financing. Just wanted to understand are these all going to be organic capabilities that we are going to build [indecipherable] or there could be some acquisitions along the way?

Rajeev Jain — Managing Director

So in — all organic, no inorganic, that’s the answer. We like to build businesses rather than buy businesses. So — and we’ve already outlined our ambition — towards their ambition, products that of our customers wallet that we don’t offer, which we got to cover. I also said, however, in the last quarter’s call, that the new product launches contribution to AUM will not be material number for next three years.

Let me make that point, let me reinforce actually that point. It will — the next three year AUM is essentially going to come from the current set of products, that — if you take a five-year view, which is really why we published a five-year strategy, the answer is yes. In a three-year horizon, we are not like to see a material change in the product mix stack and the contribution of these products to the overall AUM. So next three-year AUM will come from existing set of products essentially.

Abhijit Tibrewal — Motilal Oswal — Analyst

Thanks, Rajeev ji. My last question is again on this personal loans will be unsecured personal loans, you just briefly touch upon that earlier, wherein you also highlighted that, given that we have a whole host of NBFCs who have entered this segment, NBFCs who have not seen many cycles in the past, who have entered this segment. How asset quality could really pan out for this product?

My question here is, Rajeev, I mean, from what I understand [indecipherable] at least among NBFCs, the clear leader in this product segment and probably we still are. But within that we have, I mean, I can think of so many NBFCs today.

And third, this personal loans will be product segment started offering all these flexi loans, which we are championed in the past. Are you seeing, I mean, the pie itself going up? Or are they some of these NBFCs gaining market share from the investment?

Rajeev Jain — Managing Director

When I was making — talking unsecured personal loan, I was not meaning NBFCs. Let me clarify, I was meaning the overall banking system. Because NBFCs are only 20% of the system, the 80% is banking system. I think that’s — so I was meaning the entire banking system, banking being or the financial system, including PSU, private, public and NBFC. And the order is, this is not the order, I mean, all.

And as I said when I look at the numbers, I hope people have modeled their models to know these are fixed interest rate products have a cycle. And they know they’re only been going longer across the industry what we can see. So that’s really what I was meaning. But I was not meaning fintechs, I must reinforce the point. I was not meaning fintechs, I was not meaning small loans, I was referring to INR3,00,000 plus average personal loan, which is, so that’s really what I was principally referring to, because the small ticket personal loans deliver volumes. They don’t deliver disbursements. They don’t deliver value.

So — and as I said, as Anup is saying that, is it risk adjusted or not, that’s the point Anup is making. It’s a fixed interest rate, long tenure, cycle not founded for frame, is the only point I’m flagging, if I may say, so.

Abhijit Tibrewal — Motilal Oswal — Analyst

Yeah. Fair enough, Rajeev. This is useful. Thank you very much and wish you and your team the very best.

Rajeev Jain — Managing Director

I would just make only one point. I mean, I know the rightful thing to do would be to seek, if I may say so as investor community, so that I’m not — is to look at bureau data. I’m not speaking from personal assessment, I’m speaking from bureau data on a formal structure basis, is the reason I’m making the point. So that it’s — and I would encourage you guys to engage them and seek information whatever they are able to provide.

Abhijit Tibrewal — Motilal Oswal — Analyst

Thank you so much.

Operator

Thank you. The next question is from the line of Piran Engineer for CLSA India. Please go ahead.

Piran Engineer — CLSA India — Analyst

Yeah. Hi, thanks for taking my question. Sir, firstly, if I may just start-off, given that you all are meaningful players in the credit card market. And revolver shares across you are down. Just what are your thoughts on, what will it take to improve, what are the levers to offset that as a credit card player?

Rajeev Jain — Managing Director

I mean, we are — we essentially distribute on behalf of RBL and DBS. I see the RBI, they don’t spend and revolve and so on and so forth. It clearly does seem that structurally revolve rate is down. And nobody has answer to spend somewhat down that much spend that up, but revolve is down. There is something at work, nobody can share the answer. And we essentially had distributors, so we have only that much insight into the profile. But I — whatever I hear, I do clearly hear the revolve rates are down, anywhere between 8%, 10%, 11%. Yeah, so nobody knows that.

Piran Engineer — CLSA India — Analyst

[Speech Overlap] think to offset that, like —

Rajeev Jain — Managing Director

You can’t offset that, right. I mean, let’s say, it’s a — it will build up. Having said that, I would just say to you, that principally the only logical reasoning that everybody is able to come to is that a lot of customers who would revolve and over long periods of time and these cycles have been seen in the Western market when a crisis happens, the revolve rate drops dramatically. And over time the new customers come in, whose revolve rates are high, and it builds as part of the overall balance sheet to reflect high revolve rate. That’s really a cycle play.

Piran Engineer — CLSA India — Analyst

Right.

Rajeev Jain — Managing Director

Yeah. So sometime it’s time that you do wait for, it won’t happen quickly, but would it sometime go back? The answer is, yes. When one will have to watch monthly data, so far is not demonstrating is what it seems to me in general, that revolve rates are up in any given manner.

Piran Engineer — CLSA India — Analyst

Got it.

Rajeev Jain — Managing Director

Whatever I can read in public domain.

Piran Engineer — CLSA India — Analyst

Okay. Fair enough. And my next question, basically in the last con-call, we discussed what sort of yield hikes have been taken in fixed rate products and in the last nine months, it was about 50 bps to 70 bps. Have you seen further rate hikes in fourth quarter and are we expecting in FY ’24? The basic reason of asking this is that, in the last one-year home loan players have passed on the entire cost of funds to their borrowers, whereas auto loans, personal loans, these guys who you would have thought would have been able to pass on and not been able to pass on the entire increase in cost of funds, which is pretty counter-intuitive. So just wanted to get your thoughts on that.

Rajeev Jain — Managing Director

No, no. Your point is absolutely correct. Logically should have happened. Anyway it goes back to the point on competitive intensity, right. People are gathering assets, are they mispricing? Asset gathering is a question that led to be answered some day. Is the conclusion that one would reach is what I would say, Piran. So, it’s completely [Speech Overlap]. Sorry?

Piran Engineer — CLSA India — Analyst

Have we hiked after December? Like still December, it was 60 bps, 70 bps.

Rajeev Jain — Managing Director

Yeah. We have not hiked. We have not hiked, no.

Piran Engineer — CLSA India — Analyst

Okay, okay. And if I just may squeeze in a yes or no question, now with this removal of commission caps for insurers, any meaningfully higher distribution income possibility for you all?

Rajeev Jain — Managing Director

Piran, difficult to answer. I think ideas come out with regulations at this point in time. And the insurance companies are expected to review it, see the performance of the intermediary, see how penetration is going up. And based on that, probably take a call in terms of what a rightful commission, that they deem appropriate. I would say, [Speech Overlap] depending on buy scale and the unique features that a corporate Indian [Phonetic] can bring to the insurance company.

Sandeep Jain — Chief Financial Officer

And performance of the portfolio.

Rajeev Jain — Managing Director

I think, RBI has reasonably liberalized it. They have given caps. And within that the insurance company is expected to follow a policy, so we’ll lever that.

Piran Engineer — CLSA India — Analyst

Got it, got it. Great. Thanks for your answers and wish you all the best.

Operator

Thank you. Ladies and gentlemen, that will be the last question for today. I now hand the conference over to Mr. Sameer Bhise for closing comments.

Sameer Bhise — JM Financial Ltd — Analyst

Thank you, Neerav. Thank you, everyone for joining this call today. Thank you to Rajeev and team for giving me the opportunity to host the call.

Rajeev Jain — Managing Director

Thank you.

Sameer Bhise — JM Financial Ltd — Analyst

Thank you.

Sandeep Jain — Chief Financial Officer

Thank you so much.

Operator

[Operator Closing Remarks]