Nov 10, 2016 12:21 PM IST | Source: CNBC-TV18

Capital First pegs overall growth of its assets at 25%

Discussing Capital First's second quarter results with CNBC-TV18 Chairman and Managing Director V Vaidyanathan says this was helped by 15 percent growth in the SME business and more than 40 percent growth in the consumer and two-wheeler financing businesses.

Capital First reported a strong set of numbers for the second quarter with asset under management growing over 30 percent. Discussing the results with CNBC-TV18 Chairman and Managing Director V Vaidyanathan says this was helped by 15 percent growth in the SME business and more than 40 percent growth in the consumer and two-wheeler financing businesses.

Company expects overall AUM growth of 25-30 percent, he said.

Net interest income grew to Rs 315 crore from 185 crore last year, while profit after tax at Rs 57 crore was at the highest ever.

On the impact of demonetisation, Vaidyanathan says only about 5 percent of the collections right now came in the form of cash so it does not spell much trouble.

He expects gross non-performing assets at sub-1 percent for the quarter is sustainable as economic revival is visible and with demonetisation money will return to the banking system which will prove beneficial.

Below is the verbatim transcript of V Vaidyanathan’s interview to Sonia Shenoy & Anuj Singhal.

Sonia: It was a pretty strong growth that you saw in your assets under management (AUMs), a growth of 32 percent but it is slightly below what some of the analysts were expecting, maybe expectations are quite high but going forward for the second half of the year, what is the outlook?

A: With regard to estimates we had actually guided for always a 25 percent growth. We are quite happy it's upwards of 30 percent. I would like to actually break it up for you to tell you where the growth is coming from. Our small and medium-size enterprises (SME) business has grown by upward of about 15 percent and the consumer financing businesses as well as two wheeler financing business had grown upward of about 40 percent. So, blend we have grown about 32 percent for the year-on-year (Y-o-Y).

We are also happy to say that our net interest income (NII), which is the core income has actually from Rs 185 crore to Rs 315 crore and the profit after tax (PAT) was the highest ever at Rs 57 crore.

Anuj: I wanted your thoughts on this demonetisation of Rs 500 and Rs 1,000 notes. I am sure you have some lakh in loan against property as well and some of the loans that you do are in the smaller cities where of course it is legal but cash does play a part. Your thoughts on how it is going to impact business?

A: This has been a concern for the people over the last 24 hours. Basically about 95 percent of our collection is in the form of either electronic instruction; electronic clearance service (ECS) or post-dated cheques (PDCs) or internet where customers come through the internet and pay and therefore there is only 5 percent that comes in the form of cash. Even in the form of cash at the heart of it what is really happening people are going to deposit their old Rs 500 notes with the banking system, they are going to take back a new Rs 500 note. So, it is just that a lot of unaccounted cash will come back to the banking system probably but that is about it. So, basically people still continue to pay and if anything we actually expect that the mode of clearance of 95 percent through electronic system might inch up in the days to come. So, there is no cause for concerned either on loan against property basis or the normal SME business.

As far as loan against property business was concerned about 42 percent is the loan-to-value (LTV). So, really we do not expect any dramatic things to happen here and I just wanted to reassure your viewers and investors.

For entire interview, watch accompanying video.

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