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Financial Performance of L&T Finance Holdings for the quarter ended June 30, 2016
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NewZNew (Chandigarh) : In April 2016, L&T Finance Holdings (LTFH) unveiled its strategy to reach top quartile Return on Equity (RoE) by FY 2020. As part of this strategy, LTFH realigned its focus on profitable growth in three lending businesses – Rural, Housing and Wholesale while de-emphasizing other products in its lending portfolio. The focus in Investment Management and Wealth Management businesses remains on enhancing value by increasing AUM and customer
base.

The following are the key updates to the strategic roadmap achieved in this quarter:

  • Cost to income ratio improves from 32% to 29%
  • Divestment process for de-emphasized portfolio is on track
  • Actions on Centres of Excellence for focused businesses initiated

LTFH financial performance for the quarter ended June 30, 2016 is as below:

Increase in PAT from focused businesses: Consolidated PAT to Shareholders* grew by 21% to Rs. 175 Cr. for the quarter ended June 30, 2016 from Rs. 145 Cr. for the quarter ended June 30, 2015.

This improvement is mainly on account of a sharp profit growth in the focused businesses with a healthy RoE of 13.81% in the current quarter. The negative impact of the deemphasized product portfolio on the overall RoE would see reduction in the subsequent quarters as this portfolio runs-down/ is divested.

Q1FY16                         Business Segments (Rs Cr)                            Q1FY17                      PAT

Y-o-Y (%)

PAT                 RoE                                                                                       PAT             RoE

45            16.53%        Rural Business                                                       67      21.99%                49%

16              9.66%         Housing Business                                                 39      15.04%              141%

132            13.05%        Wholesale Business                                           129      11.36%                (2%)

193            13.22%         Focused Business                                            235      13.81%                 21%

(16)           (6.82%)         De-emphasized Business                                (36)    (21.70%)                       –

178            10.57%         Lending Businesses                                         198      10.66%                 12%

15              4.25%

Other Businesses  **

9         3.47%              (43%)

192              9.48%         LTFH Consol. (Reported)                                 207        9.82%                   8%

47                        –         Less Preference Dividend*                                 32                  –              (32%)

145              9.09%

LTFH Consol. (To Shareholders) *

175         9.78%                 21%

Standalone

Growth in loans & advances in the focused lending portfolio: Loans & Advances in

the focused businesses grew by 23% y-o-y to Rs.53,331 Cr as on June 30, 2016 as compared to Rs.43,256 Cr as on June 30, 2015. This growth was led by disbursements in housing finance, operational projects in renewable energy, microfinance and two-wheeler finance. In farm equipment business, based on robust analytics and risk framework, the Company ceded market share in some geographies.

In  the  de-emphasized  portfolio,  the  loans  &  advances  show  a  reduction  of     26%.

Consequently the overall growth in Loans & Advances is 17%.

Loans & Advances (Rs. Cr.)                                         Q1FY16             Q1FY17                 Y-o-Y (%)

Rural Finance                                                                         7,486                  8,586                          15%

Housing Finance                                                                   6,781                10,408                          53%

Wholesale Finance                                                             28,989                34,336                          18%

Focused Products                                                              43,256                53,331                          23%

De-emphasized Products                                                  5,962                  4,405                        (26%)

Total                                                                                       49,218                57,736                          17%

Improvement  in  asset  quality: As per regulatory requirements, LTFH has started recognizing NPAs at 120 days of delinquency. Gross NPA% has reduced from 5.45% as on June 30, 2015 to 4.58% of book at the end of the current quarter.

Rs. Cr.                                                                                                Q1 FY’16                             Q1 FY’17

Gross NPA                                                                                                2,635                                   2,599

Net NPA                                                                                                    2,118                                   1,752

Gross NPA %                                                                                          5.45%                                  4.58%

Net NPA %                                                                                              4.43%                                  3.13%

Provision Coverage %                                                                             20%                                     33%

The Company’s provisioning policy takes into account long term portfolio behaviour based on the probability of default and loss given default of the portfolio.

Generating value through the Investment Management and Wealth Management

businesses:   In   the   Investment   Management   business,   Average   Assets   under Management (AAUM) for the quarter grew by 28% to Rs. 28,404 Cr as compared to Rs. 22,213 Cr for the same period last year. The share of equity assets is at 40% of the total AAUM, reaching Rs 11,381 Cr representing a 25% increase on a y-o-y basis from Rs.9,107 Cr. In the Wealth Management business, the Average Assets Under Service (AAUS) went up by 36% – from Rs. 7,143 cr. to Rs. 9,693 cr. y-o-y with client – base growing from 3,300 to 4,800.

Management Commentary

Commenting on the results and financial performance, Mr. Y. M. Deosthalee, Chairman, L&T Finance Holdings, said, “We are happy to report a healthy 23% growth in loans and advances of our focused businesses along with 21% growth in PAT to shareholders for the quarter on a y-o-y basis. This has been despite slower than expected pick up in the overall economy and significant cash flow pressures in the rural markets. Our focus on financing operational
projects in renewable energy and road sectors, and select segments of rural and housing finance has enabled this. Our philosophy of being a focused financial services player is playing out positively in terms of maintaining a consistently healthy growth in assets and profitability.”

CP Singh
CP Singhhttp://www.cpgrafix.in
I am a Graphic Designer and my company is named as CP Grafix, it is a professional, creative, graphic designing, printing and advertisement Company, it’s established since last 12 years.

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