CreditAccess Grameen: Q3 FY26 Performance Driven by Asset Quality Normalisation and Strategic Growth

CreditAccess Grameen Limited, a prominent Non-Banking Financial Company-Micro Finance Institution (NBFC-MFI) in India, has reported a robust performance for the third quarter and nine months of the financial year 2025-26. The company's Q3 FY26 results highlight a significant turnaround, marked by strong asset quality normalization and a renewed focus on strategic growth. Profit After Tax (PAT) for Q3 FY26 surged by an impressive 153.3% year-on-year and 100.4% quarter-on-quarter, reaching INR 252.1 Crore. This strong financial outcome translated into a healthy Return on Assets (RoA) of 3.5% and Return on Equity (RoE) of 13.8%, underscoring the company's operational efficiency and profitability.

The company's Gross Loan Portfolio (GLP) expanded by 7.1% year-on-year to INR 26,566 Crore, driven by healthy disbursements that increased by 13.4% year-on-year to INR 5,767 Crore. This growth was supported by the addition of 2.06 lakh new borrowers in Q3 FY26, with 39% being new-to-credit customers. The retail finance portfolio continued its steady expansion, with its share in AUM rising to 14.1% from 11.1% in the previous quarter, reflecting a strategic shift towards diversified product offerings. The company's network also grew, adding 15 new branches to reach a total of 2,222 branches, and its employee base expanded by 12.2% year-on-year to 21,701.

Asset Quality and Operational Efficiency

A key highlight of CreditAccess Grameen's Q3 FY26 performance is the significant normalization in asset quality. The X-Bucket collection efficiency stood at an impressive 99.71% in December 2025, an improvement from 94.5% in September 2025. Monthly PAR 15+ accretion declined sharply to 18 basis points in December 2025 from 47 basis points in September 2025, with January 2026 continuing to show similar positive trends. This improvement is broad-based, with Karnataka, a core state, witnessing a notable recovery and asset quality reverting to historical levels. The company's proactive alignment with MFI guardrails over the past six quarters, including tighter credit underwriting and improved customer sourcing, has been instrumental in stabilizing asset quality.

Despite a one-time impact of INR 18 Crore due to new labour codes, operating profitability gained strength, driven by improving yields and a lower average cost of borrowings. The Net Interest Margin (NIM) increased by 60 basis points quarter-on-quarter to 13.9%. The company's disciplined liability management led to a 26 basis points quarter-on-quarter decline in the average cost of borrowings to 9.4%. Foreign borrowings now constitute a healthy 24.3% of the total, moving closer to the medium-term target of 25-30% by FY28, ensuring a diversified and stable funding base.

Strategic Outlook and Digital Initiatives

CreditAccess Grameen is well-positioned for robust business growth and improving return ratios. Management guidance for FY27 includes a credit cost of 4% to 4.5% and NIMs in the range of 14% to 14.5%. The company aims for at least 20% annual growth to achieve its medium-term goals, with microfinance growth expected to be in the early teens and retail finance contributing significantly to the overall expansion. Approximately 10% of customers are estimated to graduate to retail finance annually, further bolstering this segment.

Technological enhancements are a core part of the company's strategy to drive operational efficiency and customer engagement. Key initiatives include investments in Enterprise Service Bus and Microservices Architecture for greater agility, enhancements to existing mobility apps for automated data entry and a unified platform, and the extension of workflow capabilities for process automation. The company is also actively exploring partnerships with fintech players to implement innovative digital solutions and investing in zero-code platforms for faster technology deployment. The success of their digital handle, 'Grameen Mahi,' with nearly 1 million downloads and 20% digital collections by December 2025, reflects strong adoption and a meaningful shift in customer engagement.

In conclusion, CreditAccess Grameen's Q3 FY26 performance demonstrates a strong recovery and strategic clarity. With normalized asset quality, a robust balance sheet, and a motivated team, the company is confident in nurturing a business that consistently delivers returns, enhances stakeholder value, and sets new benchmarks of excellence in the industry. The focus on disciplined growth, asset quality, and digital innovation positions CreditAccess Grameen for sustained success in the evolving microfinance landscape.