For those who are into numbers and the drivers of bank profits I forgot to mention the take away in relation to HDFS.
The financial services division operates like a bank and borrows the money they lend, it seems, so their income from financial services is the interest they receive and there cost of sales is the interest they pay.
The reason their profit as a percentage of interest received dropped from 45% in Q1 22 to 26% in Q1 23 is because they would charge a fixed % margin for profit on funds lent. As interest rates rise the margin drops as a percentage of the total interest charged.
A 2.5% margin is 45% of an interest rate of 5.6% but is only 26% of an interest rate of 9.6%
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