In an interview to CNBC-TV18, R Venkataraman, Managing Director, India Infoline elaborates on the reasons why the company reported a dip in PAT from the previous quarter.
The portfolio mix has undergone a significant change because of the asset price volatility in the last quarter.
R Venkataraman, managing director of IIFL expects the pressure on the broking firm's NBFC business, which has been its main growth driver, to ease in coming quarters.
The company reported a consolidated net profit fell to Rs 63.2 crore for the June quarter against Rs 81 crore in the previous quarter. The consolidated income from operations stood at Rs 673.3 crore versus Rs 732 crore in the March quarter.
Venkataraman attributes the performance to the change in the asset book composition in the company’s order book. NBFCs saw a reduction in the gold loan business, while the mortgage and home loan grew over this quarter. In the coming quarters, he is positive on the financial products, wealth management and NBFC business. However, the capital markets business will not see a significant pick up as retail activity has reduced, he adds.
Below is the edited transcript of his interview to CNBC-TV18.
Q: Can you just take us through what where the highlights of the quarter’s performance?
A: We just announced our results for the June quarter-ended our profits are up 21 percent year-on-year. We saw a 16 percent growth in our top-line. This is up on a year-on-year basis, but down on a quarter-on-quarter basis if you compare the March 31 quarter.
It is primarily because the last March quarter is typically a peak season for the financial services industry. The growth in our income as well as profits has been primarily driven by the non banking financial companies (NBFC) business.
Q: What exactly are the top-line and the bottom-line growths?
A: The income for the quarter was Rs 676 crore, which is up roughly about 16 percent on an year-on-year basis. The profit after tax (PAT) for the quarter was Rs 63 crore which is up 21 percent on a year-on-year basis.
The PAT is down roughly about 20 percent if you compare with the previous quarter.
Q: How did the margins fared?
A: Growth has been primarily driven by our NBFC business. If you look at our NBFC business the book is roughly at about Rs 9,500 crore, which is virtually flat from the quarter that ended.
But the portfolio mix has undergone a significant change because of the asset price volatility in the last quarter, which we saw in the gold loan business. Gold loan as a total percentage of the book has come down and that has been compensated by growth in our mortgages business.
We are seeing some amount of compression in the net interest margins (NIMs) primarily because of change of the asset mix.
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