Update | Financials
| 20 March 2019
Financials - NBFC
FY14-18 deposits CAGR (%)
Analyzing the deposit franchise for NBFCs
BAF, PNBHF outperform peers on deposit front
We analyzed the liability trends of some leading NBFCs, with a special focus on the deposit
franchise. Over the past four years, Bajaj Finance (BAF) has outperformed peers, with a
CAGR of 87% in the number of depositors (accounts) and 145% in deposits. PNB Housing
Finance (PNBHF) and Shriram Transport Finance (SHTF) have also performed well, with a
deposit CAGR of 64%/37%. HDFC has been treading steadily, and its depositor base of
nearly 2m is ~14x of the next largest competitor. Only MMFS has witnessed a steady
reduction in its depositor base and dependence on deposits.
FY14-18 no. of accounts CAGR (%)
Total deposits (INR b)
Deposits as % of borrowings
HDFC – depositor base by far the largest, but growth modest
HDFC has by far the largest depositor base approaching 2m customers.
while the company has done well on asset growth, it has lagged slightly on the
Depositor base CAGR has been only 2% over the past four years
Overall growth in deposits has been driven more by an increase in the
average ticket size – at 11% CAGR to INR0.5m. Note that this could also be due to
the mix shift from retail to corporate deposits.
Bajaj Finance – superior performance on values/volumes
BAF’s management has a clear-cut objective to increase the share of deposits to
20-25% of total borrowings over the next three years.
Going by the trend of the
past four years, it is well on track to achieve the same, both by volumes and values.
The company has recorded a CAGR (FY14-18) of 87% in the number of depositors
and 145% in the deposit base. Average ticket size of INR0.75m is higher than that
We attribute this to: (a) a higher minimum ticket size at BAF (INR25,000)
compared to HDFC (INR20,000) and (b) possibly a higher share of non-retail deposits
at BAF (60%) than HDFC.
Mahindra Finance – Scaling down the deposit franchise
It is interesting to note that MMFS has been scaling down its depositor franchise.
The number of accounts declined from 210k in FY14 to 130k in FY18.
partially offset by a 9% CAGR in the average ticket size to INR0.24m.
The past two
years (FY16-18) have witnessed a significant reduction in the deposit base from
INR48b to INR31.
Note that these numbers exclude inter-corporate deposits (ICDs).
Steady performance by PNBHF and SHTF
PNBHF and SHTF do not disclose the number of depositor accounts in their annual
reports. However, they have both scaled up their deposit base significantly –
PNBHF/SHTF have recorded deposit CAGR of 64%/37% to INR115b/INR81b.
Research Analyst: Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 6129 1526
| Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 6129 1539
Story in tables
(Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
20 March 2019
Investors are advised to refer through important disclosures made at the last page of the Research Report.