L&T Finance Holdings Ltd’s (LTFH) consolidated profit before tax dipped by 39.15 per cent to Rs 455.94 crore for the fourth quarter ended March, 2020 (Q4Fy20) on additional provisions made to deal with the effect of the Covid-19 pandemic.
The company had posted pre-tax profit of Rs 749.36 crore in January-March 2019 (Q4Fy20). The figures are for consolidated balance sheet as the BSE-listed entity acts as a holding entity for operating companies.
The net profit for the reporting quarter were down to Rs 384.86 crore from Rs 552.12 crore in Q4Fy19.
For the consolidated entity, the net profit for Fy20 declined sharply to Rs 1,700.26 crore from Rs 2,232.03 crore for Fy19.
Dinanath Dubhashi, Managing Director & CEO, LTFH, said that the profitability for the quarter (Q4Fy20) was impacted largely due to the incremental provisions taken to strengthen the balance sheet against the after effect of the pandemic.
Sequentially, the lower disbursements, lower fee income and cost of maintaining higher liquidity, resulted in reduced net interest margins plus fees at 6.87 per cent for Q4Fy20, as against 7.29 per cent in Q3FY20. NIMs plus fees were at 6.77 per cent in Q4Fy19.
LTFH created additional Covid-19 provisions of Rs 209 crore, corresponding to 5 per cent of (1-90 days-past dues) book
availing moratorium in March’20. It also created enhanced expected credit loss provisions of Rs 105 crore, considering possible emerging stress in the economy after the lockdown is over. These provisions are in addition to the existing macro prudential
Referring to loan growth, the company said the impact of Covid-19 on the book was mainly to the extent of reduction in disbursements post lockdown in March, 2020. The total lending book shrank by 1 per cent at Rs 98,384 crore in March 2020 from Rs 99,121 crore in March 2019.
The substantial pre-planned disbursements in infrastructure finance were paused due to increasing risk perception. The retail disbursements were completely stopped in the end of March 2020 due to point of sale being closed during lockdown, it added.
The Gross Non-performing assets (GNPAs) stood at 5.36 per cent in March 2020 as against 5.94 per cent in March 2019. The LTFH capital adequacy stood at 21.60 per cent in March 2020.