Aim to grow loan book to Rs 11K cr by March 2016: Can Fin

Reduction in borrowing cost, operating cost and change in product mix aided growth in the second quarter, C Ilango, Managing Director (MD) of Can Fin Homes Limited told CNBC-TV18. The company’s net interest income (NII) grew 62.5 percent to Rs 80.09 crore and profit rose 92 percent to Rs 35.40 crore in the quarter gone by. Ilango expects benefits of product mix and low borrowing cost to continue in coming two quarters. The company expects gross non-performing loans (NPLs) to reduce by March 2016, he said adding that NPLs are uniform across the country.Can Fin is aiming to expand its loan book to Rs 10,800-11,000 crore by March next year. The current loan book stands at Rs 9,400 crore.Below is the verbatim transcript of C Ilango’s interview with Anuj Singhal and Ekta Batra on CNBC-TV18.Anuj: Your growth momentum was quite strong in the last quarter. Your net interest income (NII) grew about 62 percent, net profit grew 92 percent. Is this kind of pace sustainable?A: I would like to make one analogy. We positively expected this question. For a six months period on a year-on-year (Y-o-Y) basis, we have increased our profit before tax (PBT) from Rs 58 crore to Rs 107 crore. That is an increase of Rs 49 crore at 84 percent. Reduction in the borrowing cost has contributed 53 percent, then rights issue of Rs 275 crore, which we have received in March, has contributed to 25 percent. Operating cost and the change in our product mix have contributed to the extent of 22 percent.So, probably for next two quarters we may likely to continue to reap the benefit of these things. As of now, the non-convertible debentures (NCD) and commercial papers (CP) from 12 percent, we have increased to 37 percent over a period of a year and probably we may increase upto 50 percent.Ekta: Can you give us some guidance in terms of your net interest margins (NIM) as well because that improved on a sequential as well as on a year-on-year basis. From this 3.1 percent level, where can you go maybe by the end of the fiscal?A: We are not expected to tell about the numbers. We have some internal numbers for us to reach. For June, 2015, it was 3.04 and September, 2015 it is 3.10 that is a conventional model. We are not including the processing charges into NIM. If we are including processing charge component then the NIM will be 3.47.Probably, we expect to grow in the same range.Ekta: If you had to talk more about your loan book, can you tell us where exactly did you see the highest credit growth and maybe in terms of geographies, where do you see the most benign asset quality trends as well?A: Our growth pattern, since we are South India based, 72 percent growth comes from the South. That is Bangalore is the number one. They are contributing around 38 percent of the growth. Then next one is Chennai, 16 percent then 16 percent Hyderabad, around 17 percent from National Capital Region (NCR). The remaining 10-11 percent is spread over the country. Bangalore city is contributing to the range of 37 percent. That is in terms of book size.Coming to the asset quality, asset quality is uniform across the country. Even though Gross non-performing asset (NPA) is 0.29, last year also, gross NPA for September, 2014 was 0.28. We are confident that during March, the figures will come down substantially.Ekta: So, you expect the gross NPL to reduce from the 0.29 that it already stands at by March, 2016?A: Past performance is not a guarantee for the future.Ekta: If you could give us more guidance in terms of your loan book. It is up 32 percent for the entire fiscal. How much growth do you envisage and do you at some point expect maybe a base or a higher base to be created for you?A: As of now, we are around Rs 9,400 crore. We are planning to reach a level of Rs 10,800 to Rs 11,000 crore. In fact, during the first week of October. We have reduced our rate of interest by 0.55 on our loans. So, the response during October has grown. Taking into account all these things, we are planning to reach a level of Rs 11,000 crore that is our internal target. Probably we may end up with Rs 10,800 crore and thereabout as of March, 2016.