L&T Finance profit falls but loan book back to pre Covid levels

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L&T Finance profit falls but loan book back to pre Covid levels


Mumbai: L&T Finance Holdings’ net profit halved to Rs 291 crore in the quarter ended December 2020 compared to Rs 581 crore a year earlier as income dropped and expenses remained elevated, results released by the company showed.

However, the third quarter was the best for the company in the pandemic hit fiscal 2021 as net profir increased as 10% from the Rs. 265 crore reported in the quarter ended September 2020.

Profits fell year on year as total income dropped 3% to Rs 3622 crore from Rs 3736 crore a year earlier mainly as loan growth remained slower than last year. Expenses remained elevated at Rs 3273 crore from Rs 3011 crore, up 9% from a year ago.

Total lending book however has come back to pre Covid levels at Rs 1 lakh crore up 1% from the Rs 99,453 crore reported in December 2019.

The company said higher farm income, positive rural sentiment, combined with the festive season helped increase disbursements during the quarter particularly in the rural leaning farm equipment and two-wheeler finance segments.

“The company witnessed excellent pick-up in disbursements across businesses and has achieved highest quarterly disbursement since Q1FY20,” L&T Finance said.

Farm equipment finance disbursements grew at 43% quarter on quarter and 13% compared to last year, the highest quarterly disbursement since fiscal 2017. Two-wheeler finance disbursements grew at 50% versus the September quarter and 10% versus last year while micro finance loans grew 53% quarter on quarter but were down 19% year on year as focus the company also made its highest quarterly disbursement in infrastructure finance since the first quarter of fiscal 2019.

“Post Covid, the rural economy has performed better than urban and this trend is reflected in our disbursements, which are almost at pre-covid levels. The festive season uptick and a steady recovery in collection volumes also underline our rural performance. Our strong performance in Infra disbursements should be seen alongside the sell-down volumes, which have increased on a year on year basis. It allows us to generate more fee income while proportionately reduces the need for allocating higher capital,” said Dinanath Dubhashi, CEO L&T Finance.

Gross bad loans reduced to 5.12% year on year compared to 5.94%. The company continues to carry additional provisions of Rs 1,739 crore in the third quarterY21. This is on account of macro prudential provisions, COVID-19 and accelerated expected credit losses (ECL) provisions.

“In the long term, structural changes such as government initiatives, normal monsoons and better infrastructure will continue to improve financial health in rural. We will maintain focus on capitalizing on our market leadership position in farm qquipment and two-wheeler finance to drive business volumes,” Dubhashi said.





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