Moneycontrol Bureau
L&T Finance Holdings, the subsidiary of engineering & infrastructure major, has reported a 16.7 percent year-on-year growth in consolidated profit at Rs 212 crore aided by net interest income.
Profit was also supported by operating performance that continued to remain steady with healthy margins, steady fee income and stable operating expenses, says the company, adding asset management business continued to contribute positively, which grew by 17 percent on yearly basis.
Consolidated net interest income, the difference between interest earned and interest expended, grew by 18.9 percent to Rs 805.2 crore in quarter ended December 2015 and income from operations jumped 15.8 percent to Rs 1,820 crore compared to year-ago period.
Net interest income growth was led by loans and advances that grew by 23 percent year-on-year to Rs 55,694 crore despite substantial negative growth in farm equipment business. "Advances growth was led by healthy disbursement growth of 40 percent Y-o-Y in key focus areas - operational projects in renewable energy and roads; retail B2C products – housing, microfinance and two wheelers, says the non-banking finance company in its filing.
It expects overall asset growth for the current fiscal year to be around 25 percent.
The growth in profit and advances was despite slower than expected pick up in overall economy and significant cash flow pressures in rural markets, says YM Deosthalee, CMD.
The company says net interest margin (NIM) for the lending business has shown a 20 percent growth Y-o-Y to Rs 750 crore from Rs 623 crore in same period last year. However, in percentage terms, NIM declined to 5.63 percent from 5.66 percent in same period.
Gross non-performing assets (NPA) increased 25 basis points sequentially to 3.33 percent during the quarter but on annual basis that declined 115 basis points. Net NPA also rose 23 bps quarter-on-quarter to 2.23 percent but declined 119 bps on yearly basis.
L&T Finance says sequential increase in gross NPA was largely on account of stress in rural markets, adding gross NPA showed a reducing trend on yearly basis despite above normal delinquencies in farm portfolio indicating that NPAs in other business have been contained.
In line with a conservative provisioning policy, the company carried around Rs 233 crore of provisions in excess of RBI norms during the quarter.
As per RBI norms, it will migrate to reporting NPAs on 90-day basis. "While this is expected to result in an increase in GNPAs, assessment shows that current provisioning norms will adequately take care of actual loss experienced on the ground," L&T Finance says.
Employee cost shot up 70 percent year-on-year to Rs 134.8 croe and tax expenses rose 35.3 percent to Rs 114.7 crore in Q3.
This has been despite the slower than expected pick up in the overalleconomy and significant cash flow pressures in the rural markets.
At 13:31 hours IST, the scrip of L&T Finance Holdings was quoting at Rs 58, up Rs 1.55, or 2.75 percent on the BSE.
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