Bajaj Housing Finance Ltd (NSE: BAJAJHFL) Q4 2026 Earnings Call dated Apr. 27, 2026
Corporate Participants:
Atul Jain — Managing Director
Gaurav Kalani — Chief Financial Officer
Analysts:
Viral Shah — Analyst
Shubhranshu Mishra — Analyst
Raghav — Analyst
Omkar Kamtekar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Bajaj Housing Finance Ltd. Q4FY26 earnings conference call hosted by IIFL Capital Services Ltd. 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 touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr.
Viral Shah from my actual capital services. Thank you. And over to you Mr. Shah.
Viral Shah — Analyst
Thank you Neera. Good evening everyone. This is Viral Shah from IFL Capital. Welcome to the 4Q FY26 earnings conference call of Bajaj Housing Finance Ltd. On behalf of IFL Capital, I would like to thank the management of Bajaj Housing Finance for giving us this opportunity to host the call from the management team. Today we have Mr. Atul Jain, Managing Director, Mr. Gaurav Karlani, Chief Financial Officer and other senior members of the management team. We will have opening comments from the management team post which we will open the floor for Q and A.
With that I would like to transfer the call to Atul for his opening remarks over the over to you Atul.
Atul Jain — Managing Director
Thank you Viraj and the IFF team for hosting this call. A very good evening to all the participants on the call. I have with me Gaurav, our cfo Jasminder Vipin and Pawan SBU heads for Prime, near prime and Commercial along with the other senior team members. Now I’ll be referring during my conversation on the Invested act which we have uploaded on our website and on both the topic Singapore. I hope you had a chance to go through the same. I’ll take approximately 10 minutes to quickly cover important panels on the deck with focus on key updates for the quarter and thereafter.
We’ll open the forum for Q and A moving to first panel number three. Overall a good quarter across AUM asset quality and operating efficiency where AUM grew 23% crossing one 40,000 crores of AUM during the quarter Pvt grew 20% while PAT was up by 14% due to one time tax benefit of 34 crore in Q4FY25 excluding which normalized patch growth also would have been 20% for Q4FY26. Opex to NTI has improved to 19.2% in the last quarter compared to 21.8% in last quarter of FY25 while asset quality has remained stable with GNPI 27bps which is stable sequentially while year on year there was an improvement from 29bps to 27bps.
Net NPS remains at 11bps and annualized phase cost at 19bps during the quarter. Geographical network of the company now spans across 226 branches and 182 locations. The company maintains comfortable capital adequacy position with car at 22.46% and PBC at 60.88% are both above regulatory threshold. I’ll move to the next panel which are having quarterly financial indicators. I have already covered Overall EUM growth EVM addition during the quarter was 7294 crore as against 637470 crores in Q4FY25.
At a product level for home loans, AUM grew 18%, 24% in LAP, 44% in leasenter discounting and 13% in DF DF AUM growth was subdued as we continue to see higher cash flows from the funded projects. Portfolio composition remained well diversified with home loan being dominant product with 54.1% mix, LAP at 10.8, LRD at 22.4 and DF at 11.5. Disbursements on a YoY basis grew 23% from 14,250 crores to 17,506 crore. On a sequential basis. Disbursement growth for this quarter was 6% which improved against 4% growth in Q3.
So Q3 to Q2 sequential growth in disbursement was 4% while Q3 to Q4 it was 6% last year in the Q4 we had seen higher sequential growth versus Q3 at 13%. It was driven by to REIT and large commercial transactions. I move to the next panel. Year on year cost of Funds have moderated by 60bps to 7.3% against 7.9% in Q4 FY25 sequential cost reduced by 4bps on account of rate transmission on existing borrowing while there was no replicate post number but on account of a few rate transmissions on the existing borrowing it partially offset the impact of incremental money market borrowing at a higher rate.
Last quarter the money market borrowing was at an elevated rate from the Q3 borrowing mix remained well diversified with money market composition at 49%, bank borrowings at 41% and NHB refinance at 10%. Gross spreads overall have moderated by 10 beeps to 1.7% in Q4FY26 comparing to 1.8% in Q3FY26 on a sequential basis. This was pertaining to portfolio yield reduction by 14 beeps from lower acquisition pricing as well as portfolio attrition of a higher rate book partially offset by four beefs due to the benefit in cost of funds, thus resulting into spread compression of 10 days net interest margin for the quarter it dropped by 12bps sequentially from 4% in Q3FY26 to 3.8% in Q4FY26 largely due to moderation in net interest income.
As I explained above, OPEX to NTI which we have covered in the previous Panel grew to 19.2% in Q4 FY26. I’ll move to panel 6. Asset quality continued to remain healthy with GNP in line with Q3FY26 at 27bps and NNPA is also stable sequentially at 11beeps. Annualized credit cost for the quarter was 19bps as compared to 11bps in Q4FY25. This is only on account of on a yoy basis we have strengthened our provisioning coverage on stage two assets. If we exclude the standing of provision which you can see in the provisioning coverage that stage three we have improved our coverage by 6%.
If you exclude that then the overall credit cost would have been 10bps against 11beeps of last year. By and large stable profit after tax as called out grew 14% from 587 crores to 669 crore while excluding one time impact it grew 20%. Annualized ROE was 2.3% in Q4FY26 compared to 2.4% in Q4FY25 while ROE was stable at 12.2% against 12.1% in Q4FY25. As of March 26th net worth of the company stood at 22,527 crore. I’ll move to panel number seven. This is a new panel in the deck to share an update on actual performance as against the FY26.
As we had shared in July 25, all metrics were in line or better against the initial assessment as the company performed well across AUUM growth, OPEX asset quality and return metrics. EVM growth was at a higher end of assessment range at 23% for the year amidst competitive intensity and also increased portfolio portfolio attrition. Company managed nim moderation to seven weeks as against our initial assessment of 15 to 20bps on account of higher fee income and assignment income than planned. OPEX to NTI improved to 19.7% against 2021% of initial assessment.
Asset quality also improved with GNPA remaining at 27 bips and NPA at 11 bips again 35 to 40 bips and 15 to 20 bips respectively what we had estimated. ROA and ROE were also ahead of the initial assessment for the year when we published the assessment in July 25th. I’ll move to panel 19. I have talked about majority of the quarterly metric on the previous panel. In terms of other metrics, net interest income grew 15% in Q4FY26 while net total income grew 20% on YoY basis supported by hierarchy and assignment income.
The coming to full year performance. Net interest income grew 25% to 3752 crores in FY26 and net total income increased to 4391 crore, a growth of 23% over the previous year. Opex grew 16% to 867 crore pre provisioning. Operating profit was up 25% overall PBT grew 20% and pad by 18% excluding one time impact of tax benefit last year PAT was also up 20%. OPEX 20 improved from 20.9% to 19.7%. This is a full year against a quarter number. What I was saying improvement of 120 beeps on a year on year basis.
Credit costs for the full year was 17 beeps again 7 beeps in FY25. Last year we had an overlay release of 60 crores in FY25. If we exclude then the credit cost for FY25 would have been 13 beeps and if we exclude the strengthening of provision, what we have done in stage two would have been by and large stable in the credit cost for the current year versus the last year excluding overlay release. ROA as called out stood at 2.3% against 2.4% and ROE at 12.1% in FY26 compared to 13.4% in FY25. FY25 was a partial year for the capital growth.
Capital raise happened during the year middle year middle of the year. That is where the amount of capital on an average deployment was lower. Moving to panel 21 on the portfolio yield it has contracted by 14 beefs on sequential basis. As I called out earlier, cost reduced by 4 beefs resulting into moderation of 10 beefs in the spread. Other metrics we have already covered on the previous panel. I’ll move to next panel which is 22 panel. The company continue to have a diversified borrowing mix with focus on longer term funding enabled by highest possible credit rating of and relationship with 18 banks.
Sequential basis bank borrowing mix has improved by 1.4% or 140bps CP by 110bps and NHB refinanced by 120bps which was a reduction of an NC mix of a 370bps. So 140bps of a bank increase, CP of 110 and NHV refinance of 120bps increase offsetting reduction in NCD mix. Moving to panel 25 portfolio mix remains well diversified across products with sequential increment in LRD by 50bps and LAB by 10bps. Offsetting reduction in home loans by 50bps and construction finance by 10bps. I’m on panel 27 now.
This new panel we had added last time to provide an update on Sambhav housing which covers our product constant target metric. Dedicated front end teams are deployed for both nearby and affordable businesses with differentiated underwriting models. We have centralized hub based model for near prime while having a regional hubs for affordable. Sambhav loans now are acquiring range of 410 to 425 crores of average monthly disbursements during the quarter. The quarter gone by and business is well on track to achieve 600 crore plus of a monthly disbursement over next 12 months.
As we called out in the last update, Business is operational across 73 locations at 72 tier 4 locations this business has an ADS of average ticket size of 28 lakhs with salary customer segment mix at 68% and customer having CIBIL score of greater than 750 at around 65% in quarter 4 FY26 I’ll move to panel 31. Stage 1 assets increased by 1bps on a sequential basis from 99.36 to 99.37. Stage 2 improved by 1 bip sequential to 36bps. GNPA in line with 27bps and NPA also flattened 11bps. Provisioning coverage ratio improved slightly to close to 60% in as of Q4 FY26 moving around 1.2% from what it was on Q3 just a quarter before.
I’ll come to the last which I’ll cover is The Paniway panel number 32 healthy provisioning coverage across products which is above 50% in terms of sequential movement in product level. GNPA home loan step by 1 beeps to 35 beeps. Lab GNPA reduced by 6 beeps to 46 beeps mill GNP in LRD and flat GNP for 3bps in construction finance. Overall NNP was flat at 11bps with improvement across products. That’s all from my end on key updates for the quarter. Myself and management team are happy to take address questions.
Over to you Vira.
Operator
Thank you very much. We’ll now begin with the question and answer session. Anyone who wishes to ask a question May Press Star N1 on the Touchstone telephone. If you wish to remove yourself from the question queue you may press 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles participants. You may press star N1 to ask a question. The first question is from the language of Branch of Mishra from Philip Capital.
Please go ahead.
Questions and Answers:
Shubhranshu Mishra
Hi Achal. Hi Gaurav. So quickly what if the home loans are a percentage of 54% that we give? I think in last quarter we were at around 50.7. The second is we’ve been growing the non home loan part a little faster. My sense is that we still have a BTO cash on our book. So how do we look at the prepayments? What are the levels of prepayments and how of that pre payments, what would be part payments, foreclosures and what is the actual BT out from the customers and who was the CT out going to? Who are the major competitors where it is going?
Thanks.
Atul Jain
Thanks Shubranshu. So the question first question you know on the IHL I think IHL be 50.45, 50.45, 50.45 because that’s not homeland. There is a IHL definition so which is a regulatory definition where we are required to be 50 of the total assets which includes the investments and the cash before what we hold. So that number is 50.45% which is a regulatory number which is different from the home loan composition of the balance sheet. Your second question that home non home loan had been growing faster yet prepayments in HL Quarter 4 had been the same trend as it had been on the quarter three.
So it has not come down. And the BT outrage also remains in the same range of what we had. The attrition is 20 BTout would be in the range of 12
Gaurav Kalani
10%
Atul Jain
BD out range will be 10%. So out of a total D of a 20% BTout will be 10% rest would be on account of a sell down sale of property by the customer or the part payment or the natural attrition because on the lower interest rates customers have increased their emi. The reason for non home loan will continue because at an industry level as well if you look at basis the data which we got last published on IHL growth in the industry is close to 9.5% so at a 9.5% IHL growth and if our ambition is to grow much faster that which we have put out at 21 to 23% naturally the opportunity in the non agile will be better or higher which we can manage through still the PBC mix by ability to assign out the non agile portion which is precisely the strategy what we have followed during the last one and a half two years.
Shubhranshu Mishra
Who are these competitors who are getting BT out?
Atul Jain
So this is largely the banks. Public sector banks are the largest company followed by SDFC or ic. So largest is public sector, largest is public sector bank. I don’t have the mix right now but largest is way way significant. I think the largest part of the Ryan share is public sector banks.
Shubhranshu Mishra
Understood. Just one follow up question in the IHL part it has been contracting despite doing the assignment on the non hl. So one are we likely to get some kind of a regulatory observation because it’s been contracting? It’s just a speculatory question I’m asking Second is that are we can we also do portfolio buyouts of individual home loans which props up this number as a percentage of arrange.
Atul Jain
The question is because the regulation says 50 and 60 as long as you are above 50 and 60 there is no ticker from a regulator which can be there on the number what should be there because that’s a regulation. So we remain there has not been any single month because this regulatory report has to be submitted at every month, not at a quarter or a year. We had been submitting this report at every end every every month and and there is no single month till now in our history where we have not maintained the regulatory requirement.
And yes that portfolio acquisition can be pursued. Co lending can be pursued. We have looked at in the current year we will look at a co lending to add on to that but that co lending or the cool purchase cannot address a very large part because see our overall acquisitions are very high. Our acquisition growth in the home loan also had been very high but normal organic let us say home loan acquisition versus what we can acquire through a co lending or a cool purchase. It can add on to a certain part but it can’t substitute.
It can’t make agile growth percentage very different from what it is through the organic so we continue to Focus on organics where we are growing, putting our weight on the prime housing which is the widening and the deepening of funnel as we called out last time and through where we continue to be in an investment mode. And we are looking significantly to keep on expanding in our sumbh loans as well as in the prime housing. So we’ll focus largely on organic but inorganic in terms of a portfolio.
We are looking at it. But that doesn’t. That won’t move the needle. That’s what I’m saying.
Shubhranshu Mishra
Thank you so much and best of luck for MCA in the quarters.
Atul Jain
Thank you. Thank you.
Operator
Thank you very much. Ladies and gentlemen. You may press star and one to ask the question. Next question is from the man of God of Khandelwal from JP Morgan. Please go ahead.
Raghav
Hi. Hi. Good evening. Thanks for taking my questions. I’ve got a couple of those. First on the margin decline by 12 basis points. A lot of this came from assets being declined. Can we know which product segments drove this? Was it largely home loan or. We also seen some sort of decline in the corporate on the non home corporate side. And how much was the. What was the lowest sourcing growth sourcing rate in home loans in the quarter? That’s my first question and I’ve got one more.
Atul Jain
Yeah. Hi Gaurav. So two questions you have asked. A margin decline of 12 weeks is largely by lower acquisition price and also 15 beeps of a pass through what we had done in our PLR in December. So the full impact of that 15 bits of a pass through what happened on in terms of in December came in the current also
Gaurav Kalani
25 bits on the reposite.
Atul Jain
Yeah. And 25 pips on the repo side which repo cut was in November because There is a 15,000 crore 17,000 for portfolio which is repo link. That pass through had happened in December because the November policy cut happened first. December. December. Then the PLR cut of 15 pips had happened in mid of December which have passed through on the current year. Current quarter. The full impact on the margin has come now the home loan vs non corp. Non home loan rate differential in terms of yield. Yes. Quarter four in home loan the acquisition from the yields have compressed because of a competitive intensity.
Q4 is normally a high competitive intensity market and the yields the acquisition prices come down to a certain extent. But it is also resulting from a change of a mix. You can see the largest mix or the highest margin product in our balance sheet is construction sensor or developer panel that has grown 13% versus 1 of the lease versus home loan, which is lower margin, or a lease rental discount, which is a lower margin, has grown faster. So the change of a mix, it is not an individual product but a change of a mix also which is plays a bit of a role in terms of a margin movement.
The lower sourcing is in line with whatever public sector bank lower sourcing will happen. I will not have the exact number, but it is in the prime housing. We exactly compete with all the banks, including sba, sgfc, upfront. So it would be absolutely in line with whatever the banks are happening.
Raghav
Got it. And given what we know right now, Gaurav, is it fair to assume that at least for first quarter, the yields should broadly remain stable if not fall down.
Atul Jain
So yields in quarter one
Gaurav Kalani
There would be slight compression. We will see there also while cost of fund side also we will see some marginal benefit of 3 to 5 basis points. But on the yield side we may see slightly higher impact.
Atul Jain
See, because the current acquisition pricing in month of April, we have not seen the banks moving the needle on there. The current acquisition pricing remains in line, more or less in line with what was quarter four a slight uptick in small, small compression may or may not be there. It would be by and large sideways. That’s what I can say.
Raghav
Got it. Okay. And my other question is slightly on the medium term
Atul Jain
In the interest of transparency, since you asked. On a quarter one through the year we are likely to see some compression because largely the new acquisition as the old acquisition keeps on normally interest rate reduction cycle impact is not only in the current year but in the next year as well. Because the book which has got accumulated during the last year is a lower margin book and a lower priced book. And the book which is going out is a higher priced book. So through the year we will see some contraction in the margin which will get partially offset by OPEX efficiency and partially offset by lower loan losses.
Because last year we have strengthened our provisioning coverage both on stage 2 and stage 3 normally otherwise that 17 bips would have been a 1011 bips. So some benefit you will get from there, some benefit will get from better OPEX efficiency which should to a large extent offset the impact on the yield compression for the year it will happen quarter one can be sideways from quarter four. But for the year as the portfolio keeps on going up, new portfolio which is at a lower rate keeps on going up, there will come impact.
Raghav
Got it. Thanks. This is very careful. And this brings me to my next question. Because we ended the year at 2.3 ROA, your medium term guidance is 2 to 2.2. So in that case, given what you’re saying, some limb compression offset by cost efficiencies plus hopefully better credit cost plus leverage should also increase slightly in FY27. In that case, FY27 could be another year when you are above the medium term ROA guidance. Is that a fair conclusion?
Atul Jain
We should be towards the upper end of the medium term guidance may not beat that. Leverage doesn’t have an impact on the ROE impact, it compresses but ROE it will improve to a certain extent but we should be in the medium term range with a bias towards hitting the upper end of the medium term range in the roa, which is our computation consider but of course I must follow the current times are very volatile. We are so that’s where we will come with the we last year also gave our full year assessment in the with along with the quarter one call.
This year also we’ll give a full assessment for the year in along with the quarter one call. But I’m answering broadly because I thought the interest of transparency since you asked for Q1 and I said the Q1 is largely going to be stable, I did not wanted it to lead to impression saying that we are saying go forward also stable because we estimate in full year it will have a some impact. So that’s where I just elaborated on the question.
Raghav
So effectively then some decline on margin is what will take us to closer to the 2.2 ROI mark from the 2.3 ROI mark.
Atul Jain
Yeah. So 10 weeks of a kind of a differential in ROA is likely to happen in case of a. But see there are many ifs and but that’s why I said that quarter one we will do if if there is a policy rate change from the regulator, we generally will not have an impact because then the ability to pass on will be there. We are assuming a scenario where the money market rates are higher but the policy rates are not moved up. So our ability to pass through is not there. Now if the ability to pass through is there, which is in case of a policy rate change scenario, then that scenario will not apply.
That’s where I said Gaurav, we’ll wait for quarter one because there are too many balls in the air as of now. So we’ll wait for.
Raghav
Absolutely, yeah, absolutely, I understand. Sorry. The final housekeeping question, what is the duration of your money market borrowing?
Atul Jain
We generally borrow between three years to five years, generally borrow three to five years with some part of 10 years. But last year I think generally it was three year and a five year. We generally borrow three and five years.
Raghav
This is just a money market
Atul Jain
That is NCDs. NCDs,
Raghav
Yeah. No, exactly. So I wanted to know the money market duration, how short is it?
Atul Jain
No, no, CP is hardly 2.3% of the CP is how much of the book on 31st 5% of the book. That’s a three month to one year. That on average would be around five, six months.
Raghav
Okay, got it. Okay, thanks for that.
Operator
Thank you. Participants, you may press start in one to ask the question. Next question is from the line of Raghav from Ambit Capital. Please go ahead.
Raghav
Hi, good evening and thanks for the opportunity. I have a few questions. One, can you give me the segment wise on book yields for the full year FY26. If you can divide this, you know between home loan, flat, developer finance and lre, that’ll be very helpful.
Gaurav Kalani
You will have some. Yeah. So broadly at a portfolio level, Raghav home loans would be around 850 corridor lap would be around 150 basis points above that LRD around 798% corridor and developer finance would be 11 and a half. 1175 corridor.
Raghav
Understood. And can you help me understand at what rate are you borrowing from the NCB market? I think the last issue that you would have done in January was priced at 7.1%. What would be the incremental rate on MCDs if you were to borrow today?
Atul Jain
The incremental rate Raghav works in two ways. So like let us say in December, November, January we would have been borrowing only fixed and not covering it through a OAS. Now in last month, whatever we have borrowed a 3 year NCD. The coupon rate is 7.5, 7.6. However you match it with OIS because now then you convert fixed to floater so the rate is much finer because there is always opportunity. So in the current scenario we have the fixed pricing is higher because of volatility in the market. We largely take a fixed money and then convert through the OS to a floater which is completely competitive, completely competitive with the bank rate floater.
Raghav
Understood. So does that effectively result in a lower overall cost of fund when you Much lower, much
Atul Jain
Lower on but it book gets converted to floating. So it’s not a fixed money but you get it flow converted to a floating. Floating near to report. It gets converted to in a floater sub 7%.
Raghav
Understood. And then I think for this quarter your cost of funds is somewhere around 6.99 or 7%. I think that’s what I Saw I think you mentioned that you expect it to go down further. Now how would that happen? That your cost of funds will decline further?
Atul Jain
It will be marginally sideways like we’re saying sideways. Two, three bits of a reduction should come because there is some reset of the borrowing like there is an HV RE borrowing and also the maturity of a older higher cost NCDs in the first quarter which even in the new rates when it gets substituted there is some release which comes it to partially it will get offset from a higher cost of new borrowing in the quarter one which we are seeing in a current market there. But still at an overall level we should see a minor reduction sideways, but a minor reduction towards a minor reduction in the cost of in the quarter one from quarter four.
Raghav
Understood. And just last question. The incremental yield on the home book is how much for you right now on book I think is 8.5, 8.6 incremental is how much
Atul Jain
Incremental average would be plus 8 plus 881088 15. Because we think average because this is inclusive of near prime, affordable prime everything put together. So incremental will be 8 058.
Raghav
And that’s why you’re saying that there will be spread compression in FY27 also from 1.7.
Atul Jain
Yeah, spread completion but result not resulting equally to roe completion because partial offsetting through the loan loss and partial day but still ROE completion of around 10 weeks. But that will depend like I called out in earlier call also depend upon how does the policy rate environment happen. We are assuming no policy throughput which that means that we don’t have an ability to pass on the impact of cost of fund to the market. If you have an ability to pass through then the impact can be positive.
Understood.
Raghav
And say for example there is. Do you think that considering the comparative intensity out there and the moderation in real estate sales, the industry will generally be in a position to hike the home loan rates? Or do you think that the competition is so high that even though there may be a refer rate hike, the industry will still not want to pass on the hike
Atul Jain
In case of a policy rate hike. In any case we are assuming that what we normally see from month of May onward the in the year generally the rate the yields tend to harden up from what it are there in the master. That’s a normal pattern in the industry. Leave that aside as well. But if there is a policy rate hike it has never happened that there is no pass through has happened. The pass through may not be full pass through maybe 1015 beeps instead of a 25 beeps but it is not a scenario where banks or anyone will not pass through when there is a policy rate hike.
That’s a transmission of a a transmission of a hike in the cost which gets reflected in the portfolio. Not exactly apple to Apple not 25 to 25bps but let us say 1520bps which will be there
Gaurav Kalani
But portfolio will completely get repriced so a large portion on the repo side of the repo book repo rates increase then it will
Raghav
And in case there is a repo hike the bread would not compress if Would that be the right understanding? Yes,
Atul Jain
Yes. Yes. Because the ability to pass through the cost of fund because today we are assuming whatever the incremental cost of fund in the money markets is there because of in absence of a repo rate hike we will not have an ability to pass it through. That means we are factoring the scenario that we are absorbing that impact. But in case of a policy rate hike then that ability to pass on is there. So there will not be a compression.
Raghav
Understood. That’s all from my side and thank you for all the answers.
Atul Jain
Thanks.
Operator
Thank you Participants, you may press Star and one to ask a question. Next question is from Lionel Viral Shah from IFO Capital. Please go ahead.
Viral Shah
Yeah. Hi Atul. I have three questions. One is first of all if we assume let’s say there is no repo rate hike do you first of all see any need and requirement for say reducing the PLR rates further given what is currently there in the market competition, elevated g sec yield etc.
Atul Jain
So viral if there is no repo rate hike I don’t think this I think the scenario of a cutoff rate is over because if you are looking at two cost of funds to marginally inch up the marginal cost of fund is already up in quarter four and it is given the April also it’s looking up and on the even on the portfolio repricing what we are looking at is not sideways what we called out and from a quarter to it will start to inch up in case there is no money market remains as it is so there is no pass through Further is what can be analysis in the current scenario in case of a until unless the market because in these days I don’t know whether you should be predicting markets or not in the market completely turn on their head and there are so we don’t know but on the on the normal scenario there is no in case of a I don’t think there is any Cut scenario.
Further in the PLR which is envisaged as of today.
Viral Shah
Got it. And on the OIS piece that you mentioned the one that you are using to say convert the fixed into floating, how will this behave in say a rate hike scenario? And secondly basically what is the share of currently say on a behavioralized basis the floating rate loans or rather the borrowings, I mean
Atul Jain
Floating rate borrowings are today 63% that is including the OAS portion. So 63% is a floating rate borrowings which includes the OS portions. Now this gets converted to fixed to floating means then it remains if you are holding till maturity it behaves like a floating rate book. So whatever the policy rate movements is there that will move on from there on.
Viral Shah
Got it. My second question is with regards to the stage 2 PCR increase that we did, was it purely just a strengthening measure or are you seeing any trends in terms of say early delinquencies etc because the some bureau data analysis was showing early bounce rates. Not now this is still a three, four month old scenario and thing that I’m referring to but do you see any of those things in your portfolio? And secondly about the stage 2 PCR increase
Atul Jain
So viral in our portfolio in all the metrics whether it’s a first bounce or or first 12 month bounce, early bounce whether it is prime, non prime affordable lrd. In any case you don’t have lab. All the bounce metrics also are showing a downward trend. We map our portfolio bureau spread bureau at a portfolio level on a quarterly. We do a scrub to see where portfolio stands. It is showing improvement quarter on quarter every quarter including on March 26 it is showing improvement. So there is no micro level stress we are seeing given a overall macro scenario.
We just thought that instead of creating any other overlay then which creates another problem we just thought that it is better that internal stage two assets because stage two assays in any case we know are in they are not stage one. They have moved to a certain kind of a difficulty level Just to protect ourselves we just thought that we will increase our Stage 2 coverage purely from a prudence point of view from the current markets in a current macro environment no micro input has gone in this.
Viral Shah
Got it. And for April month also you are seeing similar trends in terms of bounce rates etc. Absolutely
Atul Jain
Same. Absolutely same across portfolios. Got it and
Viral Shah
Got it. And my last question, just more of a data keeping question. What’s the size of the Sambhav book now last quarter we mentioned around close to 5,000 crore plus and the mix of it between affordable and near prime.
Atul Jain
So close to 9000 crore is a Sambhav avum. Now 9000 crore is a sumbhavum. Roughly the mix you asked for. The mix of near prime and affordable. I had to do the mix. We. So I have to do the mix. I’ll come back to you. Ravi will inform you later. Sure.
Viral Shah
Yeah. Thank you.
Atul Jain
We generally look at it as a sum of put together so. But roughly you should take 70, 30. Right. Between affordable and nearby. We’ll come back to you with that. I don’t want to give you a wrong number. Got
Viral Shah
It? Got it. Yeah. Okay. Thank you.
Operator
Thank you. Next question is from Ryan of Omka from Ascendancy Capital. Please go ahead.
Raghav
No, thank you. I think all my questions are answered. Thank you.
Omkar Kamtekar
Thank you.
Operator
Thank you. Next question is from the land of Abhijita Brewal from Mohill Oswal. Please go ahead.
Raghav
Yeah. Good evening sir. Thank you for taking my question. See, just one question I have. We’ve heard from leaders like you that whenever interest rates or policy rates stabilize, the propensity for BT out comes down. Probably that’s more a function of the aggression from these PSU banks coming down. So what I’m trying to understand is while you mention that you guided for a 10 basis points decline in ROA where the margin decline could be offset by OPEX efficiencies, credit costs. Just trying to understand is the competitive intensity today at a point where even without policy rates moving up, the large HFCs who are catering to the prime customers can take a rate hike.
Atul Jain
So Abhijit, we in the prime market, the market which we operate, it is the banks which set the rate. It is SV and SGFC were the rate setters. We are not the rate setters. So we have to follow the market pricing what they are there. But your observation of whenever the policy rates are stable over a period of time btout rates go down. That is what we are estimating. We estimate the quarter four was an excess because normally as per normal process it should have gone stabilized by February. March, February it should have because November was our last cut.
Three months after the rate cut, last cut should have stabilized. But quarter four, February, March we saw a significant high intensity competitive activity in the market on the pricing side from both public sector banks as well as the private sector banks. Which is showing us that in the Q4 our BTO trades have not declined from what they were in Q3. But our estimate would be that April is largely a spillover from March because a lot of Sanction letters lot of checks gets cut in the March from the bank’s point of view which get deposited in April but my sense would be that now we should see start starting down of a BT outgrade from May onward to a certain extent is I think my knowledge of financial systems is that you should go down of course between now as far as the prime housing is concerned we consider irrational competitive activity as a feature not as a novelty.
So we prepare for that scenario. That’s the scenario which we called out we said when we said that we did not guide it for that I’ll just put a nuanced view I said that as of today we estimate that is but we said that we’ll guide for in the quarter one as we come with the quarter one result because we’ll have a far better clarity on the macro issue on the global issue scenario and also what is the stance of the regulator or the super in terms of a policy rates or where it is headed to because if the policy rate hikes are there like we called out then we may not have a margin compression.
So there is but we are today estimating the policy rate hikes are not there but the money market remains elevated. But we’ll come with the full guidance in the quarter one along the quarter one results.
Raghav
That is fair. And the only other question I had is while you mentioned that March the money market rates particularly NCTs the rates are elevated. I mean that same thing continues in April as well or yeah,
Atul Jain
Money market continues to be at a significantly elevated portion even today as well because it is linked to the rupee as a rupee largely rupee and expectations of you know if you look at a OAS today it prices in a 75bps kind of a rate hike scenario which I’m not fully certain I’ll not speak that is my estimate of a 75 pip side but OAS market which is a money market does so that’s why money market looks ahead. So it is pricing in a significant uptick in the policy rate if I have to say so because the OIS rates and the money market rates are implying a significant uptick in the policy rates as it moves forward.
But we have to wait I think if the scenario settles on my own assessment if the scenario settles on in matter of weeks we should have the. We should be. We should see normalization of market fast but we have to wait for the market to shape up.
Raghav
So what about banks? Are they also lending at maybe 5, 10 basis points higher than the rate at which they were Lending So same channel.
Atul Jain
So buy and add the same price the
Raghav
Same. So they have not increased their pricing. It is only the money market.
Atul Jain
The difference is because the banks normally lend at a floating. So till the rates don’t move up they will not move there. But money market works ahead, looks ahead because it is at a fixed. So that’s a differential. So money market and the banks normally behave in a different manner because the underlying is different. One is floating, one is fixed.
Raghav
Got it. And so this just to conclude this then that means on the liability side, if I look at the cost of boring, they have largely bottomed out. And from here in the subsequent quarters there’s a good probability that the cost of borrowings now inch up.
Atul Jain
Yeah. So it will. It will depend upon whether the money market prices remains elevated. Let us say after this quarter one as well. Because quarter one we are likely to see the similar. Even if the money market price remains elevated the offset which we get from the higher cost maturities will mean that we will be either at the same price or a marginal tone down of the cost of Fund for the Quarter 1 Quarter 2 onward depends upon how do the money market either see one thing has to move. Either the policy rate will move or the money market market rates will come down.
That’s what Abhijit. I’ll see after the after. After there is a stability in the macro factors. Either there is a policy hike, rates hike or the money the entire rates move up or the money market starts becoming normalized. So we’ll have to wait for the quarter to pass. Abhijit, for. For us to end the geopolitical market to get stabilized. For us to have a firm view saying that which side of the which side the market is waving. But we are by and large our portfolio is floating. So our ability to pass through the cost impact is there to that extent.
Raghav
This is very, very useful. And thank you for patiently answering all my questions. I wish you and your team the very best.
Omkar Kamtekar
Thanks Abhijit. Thank you. Thanks.
Operator
Thank you. Next question is from Madam Rishi Chavate from Kotak Securities. Please go ahead.
Omkar Kamtekar
You know, just looking at the trends in fee and assignment income, I mean both the line items, for last two years we have been sort of consistently ahead of the overall loan growth. So how should one think about it? Kind of continue to sort of see acceleration in these line items.
Atul Jain
Yeah. So loan growth nation. We would want to be significantly ahead the way we always want to grow 2x of industry. That is what we always stated. And we want to grow and we Want to continue. There is no change in the growth chance of the company. We remain very comfortable with wherever the portfolios are there. And that of course I am a general caveat I am giving that we will wait for how the overall macro and overall economic situation goes. But as of today this is the current scenario. We remain significantly upbeat and significantly in the growth mode.
So we want to grow much faster than what is there and which is either in line with what we have been doing or even we want to grow a bit faster than what we have grown during the last year as well. As far as the current year is concerned, assignment income is a function of the growth mix home loan growth mix versus a non home loan growth mix. If we have a higher home loan because we have a leverage levels available for us to be able to leverage our balance sheet more. That was a reason for the assessment when last year we gave out an assessment of a that our assignment is going to be lower because we said that if our home loan portfolio growth is able to sustain our overall growth without our assigning, we will not like to assign because we have the right now the bits available to go for more leverage and in the process earn more roe.
However, if it comes to that situation where home loan btout rates are not climbing down and the home loan growth versus a non home loan growth remains a bit subdued, then to balance that assignment income will assignment will be play a balancing factor missions always to continue to grow all portfolios whatever we can grow minus the IHL growth, what we can organically grow in the home loan. Have I answered your question? Because
Omkar Kamtekar
Sure. Just on fee income. Actually some has sort of shown acceleration versus loan growth.
Gaurav Kalani
Fee income versus so so fee income last year was 200 crores and this year it was 297 crores. Broadly driven by insurance income and some part of foreclosure income
Omkar Kamtekar
But broadly expected to grow line with the overall loan book with the growth
Gaurav Kalani
In the business.
Omkar Kamtekar
That answers my question. Thank you very much. All the best.
Gaurav Kalani
Thanks.
Operator
Thank you. A reminder to all the participants, you may press star and one to ask the question. Ladies and gentlemen, a reminder to everyone. You can press start and one to ask the question. A final reminder to all the participants, you may press star in one to ask the question. As there are no further questions, I’ll now hand the conference over to Mr. Viral Shah for closing comments.
Viral Shah
Thank you, Neera. Thank you Atul Gaurav and Bajaj housing team. Atul, do you want to make any closing comments?
Atul Jain
No, no. Thanks Viral and thanks everyone on the board for patient listening and giving us a portion of to tell our quarterly result. Thank you all very much.
Operator
Thank you very much on behalf of IIFL Capital Services Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.