Auto financiers diversify portfolio to maintain AUM growth, NIMs
Non-banking financial companies primarily focusing on vehicle finance are diversifying their product mix to boost their assets under management and net interest margins by increasingly focusing on MSMEs, mortgage and personal loan segments.
According to Centrum Institutional Research, the net interest margin (NIM) of vehicle finance is expected to compress by around 20-60 basis points in FY24. “Historically, we have seen a negative correlation between interest rate hikes and demand. Given the underlying buoyancy in business and rising competitive intensity, we expect slower transmission of repo hikes by NBFCs, resulting in NIM compression,” said Centrum Institutional Research in a recent report.