Reliance Capital - the financial services company of Anil Ambani - has posted a 20 per cent rise in net profit for the July-Spetember quarter of the current financial year at Rs 217 crore due to impressive growth recorded by businesses like mutual fund, general insurance and commercial finance.
The total income of the company rose 12 per cent during the same period to Rs 2,084 crore.
Among the key businesses, Reliance Capital Asset Management's profit before tax was Rs 114 crore recording a year-on-year growth of 71 per cent. The company's average assets under management for the quarter ended September 30 were Rs 1.22 lakh crore recording a y-o-y growth of 31 per cent. As on September 30, there were a total of 63 schemes offered by the fund house.
"The equity markets have picked up very well and these are market linked businesses. We have also been able to control other areas of costs due to which the profitability growth was good," said Sam Ghosh, CEO, Reliance Capital.
Reliance General Insurance profit for the quarter was Rs 25 crore recording a y-o-y growth of 53 per cent. The insurance company sold nearly 11 lakh policies during the quarter recording an increase of 29 per cent.
Reliance Commercial Finance achieved a profit before tax of Rs 95 crore recording an increase of 5 per cent y-o-y. Reliance Capital's broking business posted a profit before tax of Rs 5 crore recording an increase of 115 per cent.
"In our commercial finance business the main focus is on SME, loan against property and housing loans. Commercial vehicle loans are very small for us and growth has been muted there. The commercial vehicle business forms just 13 per cent of our total portfolio. Even infrastructure financing is very small for us," said Ghosh.
Reliance Capital is awaiting the final guidelines on payment banks, small banks and universal banks. "Once they are out we will take a calculated call on what is best for Reliance Capital," said Ghosh.
The Reserve Bank of India (RBI) has recently released the new norms for Non-Banking Finance Company (NBFCs) under which RBI has cut down Non Performing Assets (NPAs) recognition period to 90 days and hiked provision for standard assets to 0.40 per cent from 0.25 per cent. "We are already following the 90 day provisioning norms. Therefore, there is no impact on that front. The hike in provision for standard assets will not result in a big hit," said Ghosh.
