Shriram Transport Finance expects to see a 15 percent loan growth in the second half this year, Umesh Revankar, MD, Shriram Transport Finance tells CNBC-TV18.
The company has made higher disbursements both in the rural and urban areas, he says. "Mostly it is coming out of expansion in heavy commercial vehicle sales and the demand for movement on coal and LPG gas," he adds.
The company's gross non-performing loans (GNPL) stood at 4.18 percent due to rural stress caused by deficient rainfall in pockets of Maharasthra, Telagana, Karnataka and Uttar Pradesh, Revankar says.
In the equipment finance business, he says the GNPL for the company has increased by Rs 100 crore, adding that this will stabilise when infrastructural activities pick up.
Below is the transcript of Umesh Revankar’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: Can you begin by telling us how your loan growth was, both quarter-on-quarter (Q-o-Q) and year-on-year (Y-o-Y)?
A: The loan growth is around 13 percent in the end of this quarter. The net interest income (NII) has gone up by 18.5 percent to 1,194 from 1,007. These were the positives.
Disbursements were higher both in the rural and in the urban area. Mostly it is coming out of expansion in heavy commercial vehicle sales and the demand for the movement on coal especially and LPG gas.
Both demand is quite good and we are witnessing an increase in our heavy vehicle portfolio. And passenger vehicle movement is also high and the demand from both urban and rural market is quite good in the passenger transportation.
Latha: How much did your gross non-performing loans (NPL) increase by?
A: Gross NPL percentage is 4.18 vis-à-vis 4.07 in the in the previous quarter. There is a 11 basis point increase in this quarter, Q-o-Q. This is mainly due to the rural stress in certain pockets like Maharashtra, Telangana, Karnataka and Uttar Pradesh. The rains were deficient and people found it little difficult to repay on time, but we feel that things should improve in the next quarter.
Latha: You expect your asset quality and your loan growth to improve in the second half, both of them?
A: Definitely, yes because as the economy improves, because NPL is directly linked to the economy, both urban and rural. And this time the rural economy is not really doing well. And I feel that once the economy improves, the NPL levels will definitely come down and loan growth as we have given the guidance of 15 percent growth Y-o-Y, we should be able to meet that 15 percent growth in the second half.
Sonia: Have the defaults in your equipment finance unit begun to decrease?
A: No, it is increased by another Rs 100 crore and we are confident that the collections coming, definitely the bucket will improve over a period. As the infrastructure activity picks up, most of these machineries and equipment will have a demand and I feel this NPL will be under control by the year end.