CreditAccess Grameen Q2 FY27 Profit Rises 299% YoY

CreditAccess Grameen Ltd reported its highest quarterly profit in Q2 FY27, with profit after tax rising 298.7% year-on-year to Rs 501.6 crore. The rural-focused lender benefited from higher income, improved operating profitability and a sharp reduction in credit costs. Its assets under management also rose 19.5% year-on-year to Rs 30,946 crore.

The September-quarter performance prompted the company to raise its FY27 guidance for return on assets and return on equity. However, it retained its AUM growth and credit-cost outlook, indicating continued caution on the operating environment in some regions.

Record quarterly profit marks turnaround

The company reported PAT of about Rs 502 crore for the quarter ended September 30, 2026, compared with Rs 126 crore in Q2 FY26. Management described the result as its highest quarterly profit to date. The Q2 PAT also reflected a five-fold rise in profitability over the past five years, according to Managing Director and Chief Executive Officer Ganesh Narayanan.

For the first half of FY27, PAT reached Rs 995 crore. This was higher than the Rs 778 crore reported for the full FY26, underlining the scale of the company’s first-half recovery. The improvement came as portfolio yields strengthened, operating income grew and provisions moderated from the year-earlier level.

Income and operating profit strengthen

Total income rose 26.2% year-on-year to Rs 1,904.8 crore in Q2 FY27. Net interest income increased 31.3% to Rs 1,351 crore from Rs 1,029 crore a year earlier. Pre-provision operating profit grew 39.6% to Rs 970.2 crore.

The company also reported profit before tax of Rs 670.9 crore, up 296.6% from Rs 169.2 crore in the comparable quarter. Cost-to-income ratio improved to 28.2% from 32.5% a year earlier, reflecting better operating efficiency alongside income growth.

Key Q2 FY27 financial metrics

Lower credit costs support earnings

Credit cost declined 43.2% year-on-year to Rs 299 crore in Q2 FY27. On a non-annualised basis, the credit cost was 0.99% for the quarter. Management said 70 basis points came from new portfolio-at-risk formation, while 29 basis points reflected higher expected credit loss provisioning rates.

The decline in provisions was a central driver of the large year-on-year increase in profit. Still, the company retained its FY27 credit-cost guidance at 3% to 4%, signalling that it is not assuming the second half will remain free of asset-quality pressures.

Asset quality and collections remain stable

Gross non-performing assets stood at 1.79%, while net non-performing assets were 0.59% at the end of Q2 FY27. Collection efficiency was 99.71%, indicating continued repayment discipline across the portfolio during the quarter.

Management said it remains cautious in regions facing drought-related headwinds. This is relevant for a lender with substantial exposure to rural borrowers, where local weather conditions can influence household cash flows and repayment capacity.

AUM and disbursements continue to grow

AUM increased to Rs 30,946 crore from Rs 25,903 crore a year earlier. Disbursements rose 19.4% year-on-year to Rs 6,355 crore from Rs 5,322 crore. The company retained its FY27 AUM growth guidance of 20% to 25%.

CreditAccess Grameen said it plans to pursue responsible growth and increase new customer acquisition in the seasonally stronger second half of the financial year. Its expansion plans remain linked to maintaining collection quality and managing regional risks.

Retail finance gains a larger role

Retail Finance accounted for 23% of AUM, showing the company’s increasing diversification beyond its core rural lending base. The portfolio includes business, mortgage, housing and two-wheeler loans, aimed at addressing a wider set of household financing requirements.

The diversification is important because it broadens the lender’s product mix while AUM continues to expand. The company has not changed its overall AUM growth outlook despite the stronger first-half performance, keeping its guidance range at 20% to 25%.

Margin improvement and funding costs

Net interest margin expanded to 15.1% in Q2 FY27 from 14.4% in Q1 FY27 and 13.3% in Q2 FY26. The company attributed the margin improvement to better portfolio yields and stable borrowing costs.

Its marginal cost of borrowing and average cost of borrowing were both 9.1% during the quarter. CreditAccess Grameen also said it would reduce loan pricing by 50 basis points effective October, while remaining among the competitively priced lenders in its product segments.

Capital and liquidity position

The company reported a capital adequacy ratio of 26.9% and a liquidity buffer of Rs 3,501.9 crore. These metrics provide funding capacity as the lender pursues its AUM growth plan and expands retail finance products.

A strong capital position is particularly relevant for non-bank lenders because it supports balance-sheet growth and can provide resilience during periods of higher credit costs. The reported liquidity buffer also gives the company additional flexibility in meeting funding and disbursement requirements.

FY27 profitability guidance is raised

Following the first-half performance, CreditAccess Grameen raised its FY27 return on assets guidance to 5.2%-5.8% from 4.0%-4.8%. It lifted return on equity guidance to 21%-24% from 16%-20%. FY27 net interest margin guidance was also revised to 14.4%-14.7% from 12.8%-13.2% earlier.

For H1 FY27, return on assets was 5.9% and return on equity was 23.8%. The guidance revision reflects the stronger profit and margin performance through the first six months, while the unchanged credit-cost guidance highlights management’s caution on conditions in the second half.

What investors will watch next

CreditAccess Grameen enters H2 FY27 after reporting record quarterly profit, improving margins and lower credit costs. The main operating measures to watch will be AUM growth, collection efficiency, asset quality and the effect of drought-related conditions in affected regions.

The company has maintained its growth and credit-cost targets while raising profitability expectations. Its next updates will show whether strong first-half earnings, retail finance expansion and stable funding costs continue through the remainder of FY27.