L&T Finance saw a consolidated net profit of Rs 4.05 billion for the quarter ended March 2018, compared to Rs 3.13 billion in the same quarter a year ago. This was growth of 30 per cent year-on-year (y-o-y), backed by growth in rural and home finance business. However, wholesale business was affected due to higher provisioning.
“The company is in process of cleaning its wholesale book that impacted its overall performance this quarter. Major clean-up exercise will be completed by FY19,” said Chief Executive and Managing Director Dinanath Dubhashi.
Revenue from operations during this quarter rose to Rs 27.48 billion against Rs 21.62 billion in the corresponding quarter last year. The company’s rural business for the quarter under review grew 64% y-o-y and earned a profit of Rs 1.94 billion in the current year, while home finance business grew 51 per cent yoy and saw a profit of Rs 2.46 billion in the March 2018 quarter. Going ahead, housing and rural will be the main focus for the company. Dubhashi expects the share of these two segments, in terms of loan book, to go up to 50 per cent by FY19 from 42 per cent in FY18.
Asset quality improved as the gross non-performing assets (NPAs) in the present quarter, stood at 4.8 per cent, against 5.49 per cent in the December quarter. In the year-ago quarter, the gross NPA ratio was at 7.11 per cent. Rural segment reported a significant improvement in asset quality with gross NPA coming down to 6.4 per cent as of March 2018 from 8.2 per cent as of December 2017 mainly owing to revival in the rural economy. However, asset quality of the wholesale business improved to some extent. Management is skeptical of any sharp improvement going ahead.
Average Assets under Management (AAUM) in Investment Management business grew by 68 per cent to Rs. 659.32 billion at the end of the current financial year. Average Assets under Service (AAUS) in Wealth Management business stood at Rs. 183.46 billion as on 31st March 2018, up 35% from last year. Even in future, these two businesses are expected to boost the overall bottom line of the company. “We believe that the factors are required for turnaround are now in place. Operating leverage will come in and we see high profit growth from these two businesses going ahead,”said Dubhashi.