Cholamandalam Investment and Finance on October 29 reported a 41 percent rise in profit after tax to Rs 432 crore for the September 2020 quarter, on improvement in net income margin and lower operational expenses. The diversified financial services company had posted a profit after tax of Rs 307 crore in the corresponding quarter of the previous financial year.
"In the quarter, NIMs (net interest margins) improved compared to the same period last year. Operational expenses have been brought under control. The loan losses are also lower but we have additionally created Rs 250 crore of provisions," the company's Executive Vice-President and Chief Financial Officer Arulselvan D said. NIM grew 23 percent to Rs 1,255 crore in July-September 2020, compared with Rs 1,020 crore in the year-ago quarter.
Around 75 percent of the company's borrowers had opted for the Reserve Bank of India's (RBI) moratorium. Pursuant to the moratorium getting over in August 2020, the company had over 95 percent of the moratorium customers starting to repay their instalments till date. However, considering the externalities in the market, on a prudent basis, it has created an additional provision of Rs 250 crore towards macro provisions during the quarter.
The company's asset quality as on September 30, 2020, represented by stage-3 assets, stood at 2.75 percent with a provision coverage of 42.65 percent. Apart from the provision coverage represented above against stage-3 assets, additional provisions of Rs 549 crore have been created towards stage-1 and stage-2 assets to cover any contingencies arising out of the COVID-19 pandemic fall-out, it said.
Currently, the total provisions carried against the overall book stood at 2.64 percent as against the normal overall provision levels of 1.75 percent carried prior to the COVID-19 pandemic, representing an increase of nearly 50 percent. Its aggregate disbursements declined 13 percent in the quarter to Rs 6,457 crore as against Rs 7,381 in the second quarter of 2019-20. The vehicle finance (VF) business clocked a volume of Rs 4,781 crore in the second quarter of 2020-21, against Rs 5,796 a year ago, registering a decline of 18 percent.
The loan against property (LAP) business dropped marginally to Rs 1,052 crore in the quarter, against Rs 1,064 crore a year ago. Assets under management as of September 30, 2020, grew 16 percent to Rs 74,471 crore, compared to Rs 64,409 crore at the end of September 2019.
The company continues to hold strong liquidity position with Rs 6,802 crore as cash balance as of the end of September 2020, with a total liquidity position of Rs 9,797 crore (including undrawn sanctioned lines). The company's shares on Thursday closed 2.82 percent higher at Rs 250.10 apiece on the BSE.