L&T Finance Q1 profit rises 2% YoY to Rs 549 crore

Earnings7-Getty-1200Diversified non-banking financial company (NBFC) L&T Finance Holdings (LTFH) on Friday posted 2 per cent year-on-year growth in June quarter profit at Rs 549 crore compared with Rs 538 crore posted for the same quarter a year ago.

Net interest margin along with fee income stood at 6.76 per cent against 6.58 per cent YoY. Pre-provisioning operating profit stood at Rs 1,342 corre, up 24% YoY.

Retailisation increased to 52 per cent from 46 per cent YoY while the company maintained market share by leveraging on business strengths.

“While Q1FY20 was a tough quarter for the NBFC sector, LT Finance with its advantage of strong parentage, robust balance sheet and significant business strengths, was able to deliver results on key parameters,” the company said in a press statement.

The company said its average assets under management (AAUM) increased 3 per cent to Rs 73,497 crore in Q1FY20 from Rs 71,118 crore in Q1FY19. Assets under service (AUS) has increased 36 per cent to Rs 25,589 crore in Q1FY20 from Rs 18,866 crore in Q1FY19. In order to concentrate better on businesses where LT Finance has ‘right to win’, the company has de-emphasized structured finance and DCM book, where it is a marginal player, and made them part of defocused book.

The company claimed while the liquidity for the sector remained tight, LT Finance was able to raise requisite long-term and short-term funds at competitive rates to meet its growth requirements. It claimed to have maintained a positive asset-liability gap in all buckets up to 1 year and maintained liquidity of R 13,133 crore (including Rs 4,855 crore in cash, FDs and other liquid instruments). The company is already in compliance with key features of draft liquidity risk management framework for NBFCs and CICs issued by RBI

The company proactively diversified funding sources during the quarter, raising Rs 1,000 crore through retail NCD (in addition to Rs 1,500 crore raised in Q4FY19) and another $275 million through Tranche 1 as part of a $550 million ECB issuance programme, which was led by IFC.

The company claimed its focused lending book grew 24 per cent in Q1FY20, while the overall lending book expanded 16 per cent.

“A strong liability franchise, backed by prudent ALM and diverse sources of funding, is key to building a sustainable organization. We remain partners of choice for global financial institutions which is reflected in our recent fund-raising from IFC and other leading global financiers. Our focus on liability management and asset quality helps us to preserve and build strengths in our focused businesses. We continue to invest in footprint expansion, team quality enhancement, technology infrastructure and data analytics framework,” said Dinanath Dubhashi, Managing Director & CEO.