L&T Finance Q1 net doubles to Rs 531 cr, credit costs decline sharply

L&T Finance Holdings Ltd’s (L&TFH) consolidated net profit doubled on Year-on-Year (YoY) basis to Rs 531 crore in the first quarter ended June 2023 (Q1FY24) on steady net interest margins (NIMs) and reduction in credit cost.

The NIMs plus Fees for retail segment, which forms 82 per cent of loans, improved to 11.71 per cent in Q1FY24 from 11.57 per cent in Q1FY23. The credit costs declined sharply to 2.78 per cent in Q1FY24 from 5.03 per cent a year ago, LTFH said in a statement. Its stock price closed 2.53 per cent up at Rs 133.5 per share on BSE.

Dinanath Dubhashi, Managing Director & CEO, LTFH said the NIM+ Fees are stabilising. The interest rates in the system are also beginning to stablise.

The incremental rise in cost of funds is slowing down. There were at 7.33 per cent in Q2FY23 which rose to 7.54 per cent in Q3FY23, and further to 7.71 per cent in Q4FY23 and finally to 7.77 per cent in Q1FY24.

The company’s Retail book size expanded by 34 per cent YoY to Rs 64,274 crore at end of June 2023 from Rs 47,794 crore in Q1FY23. The company has achieved retailisation of 82 per cent in Q1FY24 itself, much ahead of Lakshya 2026 goal of greater than 80 per cent, Dubhashi said.

The Wholesale book saw an accelerated and steep reduction of 65 per cent YoY (reduction of Rs 25,992 crore YoY) to about Rs 14,200 crore and it is expected to decline below Rs 10,000 crore by end of March 2024. This was in line with the Lakshya strategy of strongly growing the retail book while sharply reducing Wholesale book.

Its Capital Adequacy Ratio was 25.75 per cent (Tier 1: 23.42 per cent) in Q1FY24 and adequate liquidity buffers in place.