L&T Finance Holdings Ltd’s (LTFH) consolidated net profit declined by 15 per cent, on an annual basis, to Rs 224 crore in the second quarter ended September 2021 (Q2FY22). However, sequentially it rose by about 26 per cent from Rs 178 crore in the first quarter ended June 2021 (Q1FY22), which coincided with the second wave of pandemic.
Dinanath Dubhashi, Managing Director & Chief Executive, LTFH, said, profits declined in Q2FY22 on an annual basis due to contraction in loan book and higher rate of taxation.
On Wednesday, the company’s stock closed 0.9 per cent lower at Rs 91.45 per share on BSE.
Referring to performance in QFy22, Dubhashi said: “Covid 2.0 as well as skewed monsoon and other macro-economic factors have had an impact on the business environment in Q2. Despite this, the Rural Finance business had its best-ever Q2 disbursement and witnessed normalisation in collections and disbursements.”
Its net interest margin plus fees and other income improved to 7.58 per cent in Q2FY22 from 6.49 per cent in Q2FY21 and 7.52 per cent in Q1FY21.
Higher NIMs have been achieved through higher retailisation (47 per cent in Q2FY22 vs 41 per cent in Q2FY21), reduction in cost of borrowing and maintaining lower average liquidity, the company said in a statement. The retail loans provide scope for higher margins compared to wholesale finance.
The company’s total lending loan book contracted by 12 per cent to Rs 86,936 crore in September 2021 from Rs 98,823 crore in year-ago period. Even sequentially, the loan book shrunk from Rs 88,440 crore in June 2021. The decline was driven by slump in demand due to Covid pandemic.
Macro finance and consumer finance, both part of retail business, are expected to show traction in the balance part of the current financial year, company MD said.
Its gross non-performing assets (NPAs) rose to 5.74 per cent in September 2021 from 5.19 per cent a year ago. They were stable compared to 5.75 per cent in June 2021. The net NPA rose to 2.81 per cent from 1.67 per cent a year ago and 2.07 per cent in June 2021.
The company restructured loans worth Rs 1,800 crore under one-time restructuring (OTR) under second regulatory package, taking the tally of recast loans to Rs 3,000 crore.
The company’s capital adequacy stood at 25.16 per cent with Tier 1: 20.06 per cent at end of June 2021.