Moneycontrol Bureau
Non-banking finance company L&T Finance Holdings' second quarter consolidated net profit climbed 18.6 percent year-on-year to Rs 215.4 crore with stable asset quality.
Profitability was supported by consistent and steady improvement in key operating parameters along with stabilisation in overall asset quality in lending business and positive contribution by asset management business, the subsidiary of engineering & construction major L&T said.
Consolidated revenue increased 15.6 percent to Rs 1,793.4 crore in quarter ended September 2015 compared to Rs 1,551.8 crore in year-ago period, driven by healthy 19 percent growth in loans and advances. Other income during the same period was up 26.4 percent at Rs 44 crore crore.
Net interest income, the difference between interest earned and interest expended, grew by 19 percent to Rs 796 crore from Rs 669 crore during same period. Net interest margin for lending business was at 5.86 percent in Q2FY16 compared to 6.04 percent in same period last year. Growth in loans & advances was led by steady disbursement growth of 18 percent Y-o-Y in key focus areas like B2C products - two wheelers, housing & microfinance in retail business and operational projects in wholesale business, the company said in its filing.
It further said average assets under management (AAUM) of investment management business grew by 17 percent to Rs 24,280 crore compared to Rs 20,673 crore for same period last year. It expects overall asset growth for the year to be around 25 percent.
"We are confident of maintaining this trend of consistent growth in assets and profitability on back of lending opportunities around focus areas of B2C products in retail business and operational assets in wholesale business," YM Deosthalee, chairman & managing director, L&T Finance Holdings said.
Consolidated operating profit jumped 13.5 percent year-on-year to Rs 1,292 crore but margin contracted by 130 basis points to 72 percent in the quarter gone by.
Asset quality remained stable during the quarter with gross non-performing assets (NPA) rising marginally (down 121 basis points year-on-year) to 3.08 percent from 3.05 percent on sequential basis. Net NPA remained flat at 2 percent quarter-on-quarter but declined 132 basis points on yearly basis.
On a Y-o-Y basis gross NPA showed an increase on back of NPA recognition moving to 150 days past due and an above normal delinquency in the farm portfolio, L&T Finance said, it carried around Rs 265 crore of provisions in excess of RBI norms.
Deosthalee said while he expects certain amount of slippage of restructured assets into NPA, farm NPLs that have shown a slight moderation on a sequential quarter basis may experience some volatility before settling to normal levels.
With incremental slippage from standard assets expected to be minimal, Deosthalee expects overall asset quality to remain stable.
Allowances and write offs increased 17 percent (down 2.3 percent sequentially) to Rs 183.4 crore in quarter ended September 2015 compared to Rs 156.8 crore in year-ago period. Tax expenses surged 18.5 pecent year-on-year to Rs 102.9 crore in Q2FY16.
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