Capital First PAT up by 55% to Rs 1 bn for quarter ended June 2018

As a consequence of migrating to the IND-AS accounting standards, the net-worth of the company has risen by Rs 2.4 bn to Rs 28.6 bn as on June 30, 2018

Non-banking financial company (NBFC) Capital First has posted a net profit of a little over Rs 1 billion for the quarter ended June 2018, up by 55 per cent, from Rs 654 million in profit-after-tax (PAT) in the same period of the previous financial year. 

Total income has grown by 31 per cent from Rs 4.6 billion in Q1 of FY18 to Rs 6 billion at the end of Q1 of FY19. This was primarily driven by higher net interest income. 

Capital First Chairman V Vaidyanathan said, "Core demand from small entrepreneurs remains to be very strong. Therefore, we believe the recent interest rate hike by the RBI (Reserve Bank of India) will not affect our business growth."

Margins have remained stable despite interest rates going up in the country over the past two years. Net interest income has grown by 51 per cent from Rs 3.5 billion in Q1 of FY18 to Rs 5.3 billion at the end of Q1 of FY19.

There was a 49 per cent increase in the interest income to Rs 9.8 billion at the end of Q1 of FY19, which has been matched by a 47 per cent rise in interest expenses during the first quarter of this financial year.

Despite a large growth in total income over the last year, the 'fees and other' expenses, which form a fundamental part of any NBFC's revenue source, was down by 33 per cent, from Rs 1 billion in Q1 of FY18 to Rs 738 million at the end of Q1 of FY19. 

At the end of Q1FY19, the total assets under management (AuM) stood at Rs 295.7 billion, up by around 49 per cent from Rs 198.24 billion at the end of Q1FY18. 

The retail loan book has grown by 38 per cent to Rs 272.2 billion for the quarter ended June 2018 from Rs 197.6 billion during the same period of the previous financial year. Retail loans contribute around 91 per cent to the NBFC's overall AuM.

"For us, the two big growth areas are home finance and providing finance to small entrepreneurs. It is important to note that small entrepreneur demand for credit has continued to be strong over the past few years and reforms like demonetisation and GST (goods and services tax) are behind us," he said.

"We believe that the real benefits of the reforms of the past three years, like demonetisation, GST or digitisation, coupled with higher public investments in infrastructure like roads, will be seen in the next four to five years. That should naturally propel the SMEs growth along with," Vaidyanathan said.

As a consequence of the NBFC migrating to the IND-AS accounting standards, the net-worth of the company has risen by Rs 2.4 billion to Rs 28.6 billion as on June 30, 2018. 

Gross non-performing assets (NPAs) have reduced sequentially from 1.62 per cent in Q4 of FY18 to 1.57 per cent in Q1 of FY19. Net NPAs have continued to stay at 1 per cent between Q4 of FY18 and Q1 of FY19.

Capital First Ltd's stock price closed at Rs 544.85, up by 0.92 per cent from its previous closing price on the BSE.