India Financials: May asset quality trend stable; some small-ticket LAP weakness

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India Financials: May asset quality trend stable; some small-ticket LAP weakness

Global Research

14 July 2026ab

India Financials Equities

IndiaMay asset quality trend stable; some small-ticket

LAP weakness Financial Services

Alok Srivastava

Analyst

alok.srivastava@ubs.com

Asset quality remained resilient in May 2026 amid volatile macro +91-22-6155 6037

May 2026 CRIF Bureau data revealed largely stable trends and MoM asset quality Yash Agarwal

improvement after seasonal deterioration in April. There are early signs of acceleration in Analyst

personal loan growth for banks (13%), although credit cards remain weak (-0.8%). yash.agarwal@ubs.com

Business loan growth for NBFCs remains weak and PAR30 improvement has stalled. +91-22-6155 6007

Small-ticket loans against property (LAP) have materially worsened in terms of PAR30, Karan Paresh Trivedi

and most of the recovery of the past few months seems to have reversed. We do not see Associate Analyst

a macro-related impact across segments. Both 1-30 and 1-90 dpd loans improved MoM karan.trivedi@ubs.com

for banks, while remaining stable for NBFCs. Among key segments, 1-90 dpd improved +91-22-6155 6177

MoM for personal loans, business loans, commercial vehicle (CV) loans, credit cards and

LAP for banks. CV loans continued to show strong asset quality amid strong demand

momentum, although oil price volatily poses a near-term overhang. The most exposed

names to the unsecured MSME space in our coverage are Bajaj Finance and HDB; Chola,

Poonawalla and BHFL are the most exposed to secured MSME. Mid-cap banks are more

exposed to asset quality risks from MSME weakness.

Banks: Broad-based improvement across products in May

As per the May 2026 bureau data, early delinquency (1-90 dpd) for most retail loan