See NIMs improving on back of RBI easing rates: PFC

Satnam Singh, chief managing director, Power Finance Company is crediting the company's loan assets growth for its stellar Q4 performance. The company reported a 58 percent jump in its Q4 profit after tax (PAT) at Rs 1,294 crore versus a PAT of Rs 818 crore the year ago.

"Our loan assets have grown by Rs 30,000 crore. That is what has led to our increased profit for the quarter from Rs 818 crore to Rs 1,294 crore- that is 58 percent higher than earlier," he adds in an interview to CNBC-TV18.
On the road ahead, Singh says the company could post better net interest margins (NIMs) once the Reserve Bank of India eases rates in its upcoming monetary policies. Below is the edited transcript of Singh's interview of CNBC-TV18. Q: We have seen some moderation in disbursements and also sanctions which have shown a degrowth and even loan growth has remained strong at 23 percent, but moderated from the levels that you used to see about 26-30 percent odd which have been reported in the past four quarters. What is it that has led to this kind of moderation?
A: If one sees the company's compounded annual growth rate (CAGR), it looks slightly lower, but then the base has been going up from year to year. If one looks at the loan growth, it is 23 percent from Rs 130,000 crore to Rs 160,000 crore.
The issues that had come up in the past in power sector, it is now on the verge of resolution. There has been some impact on the disbursements, but not much. So, in effect, our loan assets have grown by Rs 30,000 crore. That is what has led to our increased profit for the quarter from Rs 818 crore to Rs 1,294 crore that is 58 percent higher. For the year it has grown from Rs 3,032 crore to Rs 4,420 crore which is 46 percent higher.
Apart from that, we have had reset income and since Reserve Bank of India (RBI) has put a break on interest rate increases in the last year, we have gained some income on that account too. That is the reason for better performance in the current financial year. Q: What will you be guiding then in terms of your disbursements, sanctions as well as loan growth in FY14?
A: We are a memorandum of understanding (MoU) signing company. As far as sanctions are concerned, the MoU target is Rs 59,000 crore and as far as disbursements are concerned going forward, disbursements will be of the order of Rs 47,000 crore. For all this, we need to raise the resources of the order of Rs 44,000 crore. Q: What is the guidance on your loan growth?
A: Loan growth is net effect of disbursements which will take place and the repayments. So, hopefully we should be able to maintain the past trend. Q: The market was quite concerned with your numbers. We did see a cut of 4 percent odd and your net interest margins (NIMs) have declined to around 4.48 percent from the 4.6 percent that we did see in Q3. Do you see more softening in the NIMs and what is your outlook on the spreads?
A: Everything depends upon the RBI's stance on interest rates. If the interest rates are further softened as the indications are our margins maybe still higher. However, otherwise they will remain at this level. Q: Your non performing loans (NPLs) have fallen because one of the accounts was upgraded to the standard category. Do you see any more upgrades coming in?
A: As it is, our non-performing assets (NPAs) compared to the industry are pretty low. In the last quarter one of the NPA became a standard asset. Going forward, there is another NPA, namely Konaseema Gas and if there's a decision given by the High Court in favour of the developer, then we will get the payments due against that gas project too and it may become a standard asset after a while.