Large rise in NPA levels hurts Can Fin Home's Q3 results, net profit up 6%

Firm to focus on affordable housing with a proper mix of non-housing segments

Can Fin Homes Limited registered a six per cent rise in net profit from Rs 749.9 million in Q2 FY2018 to Rs 801 million in Q3 FY2018. It is one of the top housing finance companies in the country, backed by sponsorship from Canara Bank.

On a y-o-y basis, the company has registered a 34 per cent increase in net profit, from Rs 596.1 million in Q3 FY2017.

The total interest income rose from Rs 3.7 billion in Q2 FY18 to Rs 3.8 billion in Q3 FY2018. The total income earned increased, by only three percent, to Rs 3.94 billion during Q3 FY18 from Rs 3.83 billion from the corresponding previous quarter.

Net Interest Income (NII) increased between Q3 FY17 and Q3 FY18, from Rs 1,103 million to Rs 1,279 million, which represents a 16 per cent Y-o-Y improvement. Although in Q2 FY18, the NII was minutely higher than it was during Q3 FY18. Net Interest Margin declined from 3.64 per cent in Q2 FY18, to 3.58 per cent in Q3 FY18.

Outstanding loan book value increased from Rs 144.6 billion in Q2 FY2018 to Rs 150.6 billion, which is an increase of 4.1 per cent. On a y-o-y basis, the outstanding loan book has increased by 18 per cent, from Rs 126.88 billion in the quarter ending-December 2016.

The loan book is said to grow at a Compounded Annual Growth Rate (CAGR) 32 per cent, as the bank has grown the size of its operations from 83 branches or satellite offices in 2014 to 172 operational outlets at present. Disbursements have grown at a CAGR of 23 per cent over the past three to four years— from Rs 27.24 billion in Q3 FY2016 to Rs 38.21 billion in Q3 FY2018.

74 per cent of loans are given to salaried and professional customers: with marginal decreases in the loans provided towards the ‘Loans for Sites’ and ‘Mortgage loans/Flexilap’ categories. The only product categories that registered an increase in loans during Q3 FY18 were the ‘Housing Loans’ and ‘Top-up Personal Loan’ products. 

For the non-salaried, self-employed and/or non-professionals—who constitute 26 per cent of borrowers—all categories of products have seen consistent growth in the number of loans disbursed. There were increases in the loans disbursed under the ‘Housing Loans’, ‘Top-Up Personal Loans’ and ‘Mortgage Loans/Flexilap’ categories for this segment of customers. The amount of builder loans provided has consistently declined since March 2016, to constitute only 0.01 per cent of the total lending basket.
 

The Gross Non-Performing Asset (G-NPA) ratio has risen from 0.24 in Q3 FY17 to 0.46 in Q3 FY18—From Rs 301.5 million in Q3 FY2017 to Rs 688.2 million in Q3 FY18, which is an increase of over 128 per cent.

Similarly, while the Net Non-Performing Asset (N-NPA) ratio rose between Q3 FY2017 and Q3 FY18, from 0.01 per cent to 0.25 per cent, the nominal figures show that between Q3 FY17 and Q2 FY18  N-NPA levels rose from Rs 18.9 million to Rs 259 million, respectively.  Between Q2 FY18 and Q3 FY18, the N-NPA ratio rose from 0.18 per cent to 0.25 per cent. The Net-NPA levels for the quarter ending-December 31, 2017, stands at Rs 375.1 million.

The Cost to Income Ratio has declined significantly between Q3 FY17 and Q3 FY18, from 17.15 per cent to 14.54 per cent. Capital Adequacy Ratio increased from 18.79 per cent in Q2 FY18, to 19.16 per cent during Q3 FY18.

Can Fin Homes closed at the ending of trading on the NSE at 458.7, down by 5.44 per cent from its previous opening price.