 "L&T Finance Holdings' Q3 net rises 12% to Rs 326 cr on spike in NIM, fees")
LT Finance Holdings Ltd (LTFH) posted a 12 per cent rise in net profit at Rs 326 crore in third quarter ended December 2021 (Q3FY22) on improvement in net interest margin and fees.
It had posted a net profit of Rs 291 crore in Q3FY21. Sequentially, net profit rose by 46 per cent from Rs 224 crore in Q2FY22.
LTFH stock closed 3.3 per cent lower at Rs 75.55 per share on BSE.
LTFH, which is into retail, rural and infrastructure financing, saw improvement in earnings profile with net interest margins (NIM) plus fees rising 71 basis points Year-on-Year (YoY) to 8.1 per cent in Q3. Sequentially also NIM plus fees rose by 52 basis points.
Dinanath Dubhashi, Managing Director & Chief Executive said continuous retailisation of lending book will push NIMs up. Another aspect is the cost of funds, which are rising. The company has already raised long-term funds, protecting the balance sheet from rising finance costs. NIMs could moderate from 8.1 per cent level but are unlikely to decline below 7.5 per cent, he added.
Its lending book shrunk 15 per cent YoY to Rs 85,552 crore at end of December 2021. Sequentially, it declined from Rs 86,936 crore in September 2021. The retail book saw six per cent YoY growth to Rs 42,602 crore and sequentially it posted a four per cent growth.
As for asset quality, it showed a rise in Gross non-performing assets (NPAs) to 5.91 per cent in December 2021 from 5.12 per cent a year ago and 5.74 per cent in September 2021 (Q2FY22). The net NPA also rose to 3.03 per cent in December 2021 from 1.92 per cent in December 2020 and 2.81 per cent in September 2021.
The provision coverage ratio (PCR) stood at 50 per cent in December 2021. In addition to PCR, the Company continues to carry additional provisions of Rs 1,699 crore, about 2.19 per cent of standard assets.
With the robust collection momentum in existing One Time Restructuring (OTR) pool, existing provisions will be sufficient to counter any moratorium-related stress on account of OTR-related impact in future, it added.
Overall capital adequacy improved to 24.1 per cent with Tier 1: 20.3 per cent in December 2021.
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