R-Capital consolidated net profit at Rs 181 crore

Profits of life, general insurance arms aid earnings

Reliance Capital on Tuesday said its consolidated net profit for the quarter ended September 30 was Rs 181 crore, compared to Rs 401 crore in the corresponding period last year. But it clarified the figures were not comparable, as the company had made a one-time capital gain by selling a part of its stake in Reliance Capital Asset Management last year.

Excluding this one-time capital gain, the consolidated profit after tax more than trebled, on a year-on-year basis, in the second quarter. The life insurance arm and the commercial finance business made more profit, while the general insurance subsidiary reversed its loss.

Reliance Life Insurance’s profit during the quarter increased 338 per cent from the year-ago period to Rs 136 crore. Reliance Capital has 48 per cent stake in the life insurance company.

Reliance General Insurance made profit of Rs 16 crore during the period, compared to a loss of Rs 105 crore in the corresponding period last year. It sold 800,000 policies during the quarter.

“We expect our insurance businesses to perform well during the third quarter. The growth may slow down a little in the fourth quarter but we are confident of growing these businesses profitably," Sam Ghosh, chief executive officer of Reliance Capital, told Business Standard.

Reliance Commercial Finance saw its profit rising 27 per cent year-on-year to Rs 91 crore in the July-September period. Its net interest margin also improved 120 basis points from a year ago, to 5.3 per cent. It disbursed over Rs 2,000 crore during the three-month period and had Rs 16,097 crore of assets under management.

“We will aim to improve our net interest margin to 5.5 per cent by the end of this financial year. We have been cautious in lending to commercial vehicle and infrastructure segments. We will continue to focus on SME financing, loan against property and home loans. However, given the uncertain economic conditions, we expect our assets under management to be around Rs 16,500 crore at the end of this financial year,” Ghosh said.

He added Reliance Capital was also making efforts to improve its net debt equity ratio to 1.6-1.7 per cent from the current 1.8 per cent.

Shares of Reliance Capital ended at Rs 341.75 on the National Stock Exchange on Tuesday, down 4.15 per cent from the previous close.