MUMBAI:
Growth in businesses: In its focused lending businesses, namely Rural Finance, Housing Finance and Wholesale Finance, LTFH recorded 26% YoY increase in assets in Q2FY19. At the end of Q2FY19, Rural and Housing businesses together constituted 47% of total portfolio as against 38% at the end of Q2FY18.
LTFH also delivered strong growth in its Investment Management & Wealth Management businesses. Average Assets under Management (AAUM) in Investment Management business increased to Rs. 73,754 Cr in Q2FY19 from Rs. 52,749 Cr in Q2FY18 – growth of 40%. Average Assets under Service (AAUS) in Wealth Management business increased to Rs. 20,300 Cr in Q2FY19 from Rs. 16,542 Cr in 2FY18 – growth of 23%.
Improving asset quality: LTFH has shown a substantial reduction in Stage 3 assets, both in absolute and percentage terms. This has been achieved through vigorously monitored early warning signals, concentration on early bucket collections and strong Stage 3 resolution efforts. LTFH’s provision coverage has also increased during this time, indicating strength of its portfolio.
In addition to the provisions mentioned above, LTFH has set aside Rs. 110 Cr as macro-prudential provisions in Q2FY19, taking overall macro-prudential provisions to Rs. 200 Cr. These provisions are against unanticipated future event risk and are over and above the expected credit losses and standard asset provisions.
Profitability: LTFH has delivered consolidated PAT of Rs. 560 Cr in current quarter as against PAT of Rs. 338 Cr for Q2FY18, a strong growth of 66%. Having achieved a RoE of 18.45% in Q1FY19, LTFH has maintained its profitability with 18.47% RoE in Q2FY19. This has been achieved on the back of strong NIMs plus Fee income, strict control on cost and improved asset quality.
Management Commentary:
Commenting on the results and financial performance, Dinanath Dubhashi, Managing Director & CEO, LTFH, said “Enabled by the strength of our business model and a robust risk management framework, we have successfully overcome multiple headwinds during the past two years. Our prudent asset liability management has ensured that our average borrowing cost is well in control despite hardening of interest rates.
This is the second quarter where we have delivered top quartile RoE and have continued on our path of responsible growth. Additionally, over the last two years, we have successfully steered our portfolio towards ‘retailisation’, with a rapid increase in our Rural and Housing loan book. We will continue to improve our competitive positioning, maintain NIMs plus fees income and strengthen asset quality.”
