TransUnion CIBIL Report Reveals Increase in Small-Ticket Personal Loan Delinquencies

TransUnion CIBIL’s Credit Market Indicator (CMI) for the second quarter of 2023 has indicated an increase in serious delinquencies at the balance level across nearly all financial product categories, excluding credit cards and personal loans. The report reveals that the delinquency rate for consumers with at least one small-ticket personal loan rose by 120 basis points year-on-year, reaching 5.4%. Despite this uptick, MD and CEO Rajesh Kumar emphasized the overall financial stability, crediting strong retail credit growth and generally stable delinquency rates.

The report noted that small-ticket personal loans, defined as those under ₹50,000, constitute only 0.3% of the total retail loan book at the industry level. Nonetheless, these loans have experienced a notable rise in disbursals since January 2022, accounting for approximately 25% of total origination volumes. This growth has exerted only a marginal impact on the complete retail loan portfolio, which encompasses home loans, auto loans, credit cards, personal loans, and consumption loan products.

Additionally, early vintage delinquency trends on consumption loan products saw an uptick in the third quarter of FY23 compared to the same period in FY20. Lenders have expressed concern over the increasing delinquencies tied to small-ticket unsecured retail loans in light of a warning from the Reserve Bank of India.

On a brighter note, the report indicated that overall retail loan originations grew by 1% year-on-year during the quarter, driven primarily by demand from semi-urban and rural consumers. However, loan originations among new-to-credit consumers saw a decline of 4%. In the first quarter of FY24, over half of the customers who took out small-ticket personal loans already had more than four credit products. The findings also revealed that loan originations among younger consumers aged 18-30 remained stable despite shifting borrower demographics.

TransUnion CIBIL’s financial stability amidst rising delinquency can be further understood through real-time data insights. Although there has been a downward trend in earnings per share, predictions indicate that robust earnings should enable management to continue dividend distributions. Furthermore, net income is anticipated to increase this year, potentially mitigating some profitability concerns.

The company’s market capitalization is reported at $9,710 million, with a P/E ratio of -38.50, possibly indicating that the stock is undervalued. As of the third quarter of 2023, the company’s revenue reached $3,779 million, boasting a gross profit margin of 65.39%, showcasing strong profitability. Over the past week, the company’s return was significant at 10.09%, despite a decline in stock price over the preceding three months.

For individuals interested in a deeper analysis of TransUnion CIBIL’s financial performance, additional insights and guidance are available that can enhance understanding of the company’s resilience in light of current market trends.

This article was generated with the support of AI and reviewed by an editor.