Satisfied with Q4 nos; will maintain NIM at 8.5%: PTC Fin

Pawan Singh director & chief financial officer, PTC India Financial Services expects the company to maintain its net interest margins (NIM) of 8.5 percent going ahead.

The stock tanked nearly 2.9 percent at 12:22 IST on Monday due to poor Q4 numbers. But, Singh pointed out that last year PTC India earned unusual profit from sale of equity. "If we exclude that unusual profit then in that case our profit has gone up by 111 percent compared to last quarter of the previous year and if one takes it on the annual basis it is 132 percent higher. So, from our side, we are quite happy with these results and we are quite satisfied," he added. Below is the edited transcript of Singh’s interview to CNBC-TV18. Q: There has been a disappointment in your net profits as well as in your net interest margins (NIMs) this time around, can you give us any indication of how the quarters to come will shape up for you and are you expecting to see recovery anytime soon? A: The figures that we are seeing conceal more than what they reveal. If one compares our profits with the last year profit after tax (PAT) figures – last year we had some unusual profit because of sell of equity. That was not business as usual profit. So, if we exclude that then in that case our profit has gone up by 111 percent compared to last quarter of the previous year and if one takes it on the annual basis it is 132 percent higher. On the revenue side, there is marginal decline compared to last year but that is if I exclude this sell of equity business as unusual income, which we got, then we find that there is an increase of almost 60 percent. As far as we are concerned, we are quite happy with the results because our business interest income has gone up by 89 percent and interest expense has only gone up by 51 percent. Our net interest income (NII) has gone up by 123 percent. So, from our side, we are quite happy with these results and we are quite satisfied. On the operating parameters, we find that our cost of fund has come down from 10.13 percent to 8.31 percent. Our interest spread has gone up because of reduction in cost of fund from 4.17 to 5.59 percent. NIM also has gone up from 7.38 percent to 8.5 percent. Return on assets- if we exclude the sell of equity again then it goes up from 3.222 to 4.222 percent.

Q: Your cost of funds have fallen on a quarter-on-quarter (Q-o-Q) basis this quarter and margins have improved on a Q-o-Q basis by around 20 bps. What led to this NIM improvement? Can we expect the same going forward, what is the sustainable range for the margins going forward for PTC India Financial? A: We would be able to maintain similar kind of NIMs. It has come down to this level because we swapped some of their expensive loans with low cost loans. We have gone for some ECB borrowings from multilateral financial institutions, which is available at quite a competitive cost. _PAGEBREAK_ Also, going forward, interest rates from the liability side are seen coming down. On the business front, we would like to scale up our short-term disbursement where we make more yields. So we hope to follow this kind of strategy in future. With that we will be able to sustain NIM spreads in coming times. Q: Until now, how much by way of loans have you sanctioned and going forward? What kind of growth are you expecting to see in your loan book in this calendar year? A: Loan now stands at almost Rs 10,000 crore today. In fact, this year we are contemplating fairly high growth both on the sanction and disbursements side. On the disbursement side, the growth has been almost 100 percent last year. We hope to do even better than this in the current year. Q: Can you elaborate on the asset quality and the fact that you are diversifying beyond the power sector? You are looking at sanctioning of loans to infrastructure ancillary sectors as opposed to just pure power; can you elaborate a little on these two parameters of the company? A: As on date, we have nil non-performing assets (NPAs). We have improved considerably on our recoverable figure also. As far as the loan asset is concerned, we have most of our asset side towards the thermal area. From thermal area, we have tried to make it a little broad based. We have taken a sizeable exposure now in the renewable because renewable also helps us to get better sanctioned to disbursement ratio. In fact, the revenue certainty is much higher. Also, we have not diversified much in the infrastructure sector, but we have confined ourselves to energy value chain. We have entered the transmission sector and have also given loans to rail sidings, which are catering to coal supplies to power plants. We also have funded some coal mines, which are at the advanced stage of development.