Capital First Q2 PAT zooms over three-fold to Rs 1 bn, core income up 49%

Net interest income grew 55% to Rs 6.15 billion at the end of Q2 FY2019, contributing significantly to the high growth in the company's core income

Capital First has reported a net profit growth of 246 per cent to Rs 1.04 billion at the end of the second quarter of fiscal 2019 from Rs 302 million in the corresponding quarter of the previous fiscal year. 

The company's core income, which is the summation of net interest income and fee income, was up 49 per cent from Rs 4.67 billion in Q2 FY2018 to Rs 6.95 billion at the end of Q2 FY2019. 

Net interest income grew 55 per cent over the past year from Rs 3.98 billion in Q2 FY2018 to Rs 6.15 billion at the end of Q2 FY2019, contributing significantly to the high growth in the company's core income. 

V Vaidyanathan, Founder and Chairman, Capital First said, “The company continues to grow very well. There is a lot of opportunity in the space we operate in as we grow we get operating leverage. The loan book has grown to Rs 326.22 billion, and the core income has grown from Rs 4.67 billion last year to Rs 6.95 billion this year, a jump of 49 per cent. This has straight away contributed to our net profit."

Assets under Management (AuM) has grown substantially to Rs 326.2 billion at the end of September 30, 2018. The retail loan portfolio grew by 38 per cent from Rs 214.3 billion in Q2 FY2018 to Rs 395.25 billion at the end of Q2 FY2019 and now contributes to 91 per cent of Capital First's total AuM. 

"Out of the total loan book of Rs 326.2 billion, 55 per cent of our portfolio constitutes small entrepreneur loans, 36 per cent constitutes consumption loans and 9 per cent is wholesale lending," Vaidyanathan told Business Standard. 

The company's finance costs have risen substantially from Rs 3.27 billion in Q2 FY2018 to Rs 5.08 billion at the end of Q2 FY2018. 

"The incremental cost of funding has gone up quite sharply by around 100-150 bps. We are a strong company with a strong asset-liability management model and we have a substantial amount of money parked in liquid mutual funds and fixed deposits. This liquidity crisis will not affect us in any way," Vaidyanathan says. 

In a statement, the company said that its merger with IDFC bank is at an advanced stage and has received approvals from the Competition Commission of India, Stock Exchanges, Reserve Bank of India and the Shareholders and as well as Creditors.

"After the RBI no-objection-certificate for the merger, both companies filed applications for the merger with the NCLT(s). The NCLT thereafter convened the process for the shareholders to vote on the merger proposal. IDFC Bank shareholders voted 99.98 per cent in favour and Capital First's shareholders voted by 99.90 per cent in favour," he said. 

The NCLT is expected to hear the petition for the merger of the two (three) entities on December 6.    

Capital First's stock price closed Rs 448.75 on the NSE, down by 2.89 per cent from its previous closing price.