NBFC AUM growth resilient in Q3FY26, led by strong auto finance: Report

NBFC AUM growth will remain strong in Q3FY26, driven by the auto finance segment's robust vehicle demand, a Centrum report said. However, the affordable housing finance segment is expected to see weaker disbursement trends during this period.

Asset under management (AUM) growth for non-banking financial companies (NBFCs) is expected to remain resilient in the third quarter of FY26, led primarily by strong performance in the auto finance segment, while affordable housing finance may see relatively weaker disbursement trends, highlighted a report by Centrum.

Auto Finance to Drive Growth

The report stated that following a steady performance in Q2FY26, AUM growth momentum in the auto finance segment is expected to hold up through Q3FY26, with growth estimated in the range of 13-20 per cent. It stated "Disbursements for auto financiers are likely to be stronger sequentially, supported by robust underlying vehicle demand......In contrast, disbursements in the affordable housing segment are expected to undershoot expectations in Q3FY26".

Auto finance is likely to be the key growth driver during the quarter, supported by stronger sequential disbursements and robust underlying vehicle demand. Auto volumes, particularly in passenger vehicles (PVs) and commercial vehicles (CVs), have remained strong during the quarter, coinciding with the onset of a seasonally stronger second half. This is expected to translate into improved disbursement momentum for auto financiers.

Affordable Housing and Margin Outlook

In contrast, the report noted that disbursements in the affordable housing finance segment are expected to undershoot expectations in Q3FY26. This moderation has been attributed to residual macro challenges, which the report believes are temporary in nature. Despite these near-term pressures, AUM growth in the housing finance segment is still expected to remain resilient on a year-on-year basis.

It further highlighted that net interest income (NII) momentum across NBFCs is expected to remain healthy, supported by steady AUM growth and sequential expansion in net interest margins (NIMs). The improvement in margins is likely to be driven by easing cost of funds during the quarter.

Macro Trends and Operational Costs

On the macro side, the report pointed out that government capital expenditure activity has gained strong momentum in the current fiscal. Meanwhile, credit towards auto and transport equipment has shown improvement, growing by 9.4 per cent in FYTD26 compared to 8.4 per cent in the corresponding period last year, aided by policy support from the government.

The report also noted that operating expenses are expected to rise across most NBFCs, reflecting higher business volumes, branch-level investments and stepped-up collection intensity. (ANI)

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