Strong economic recovery across sectors led by Rural and Infrastructure:Highest quarterly disbursem*nts since Q1FY20, up by51% QoQ; Highest quarterly disbursem*nt in Farm Equipment and Two-Wheeler Finance since FY17
oFarm Equipment disbursem*nts up43%QoQ atRs. 1,554 Crin Q3FY21 (vs.Rs. 1,089 Crin Q2FY21)
oTwo-Wheeler disbursem*nts up50%QoQ at Rs.1,652 Crin Q3FY21 (vs. Rs. 1,102 Crin Q2FY21)
- Increase in NIMs + Fees to 7.39%, led by highest quarterly fees & other income in Rural,outcome of judicious treasury management and abundant market liquidity which led to a reduction in cost of borrowing
- Significant reduction in cost of borrowing by 50bps QoQ(from 8.32% in Q2FY21 to 7.82% in Q3FY21)
- YoY reduction in GS3 from 5.94% to 5.12%(vs 5.19% in Q2FY21); NS3 reduced from 2.67% to 1.92% YoY(vs. 1.67% in Q2FY21)
- PATin Q3FY21 saw a10%increase over Q2FY21 and stood atRs. 291 Cr
- Continue to carry additional provisions(over and above PCR and standard asset provisions)of Rs 1,739 Cr(1.90%)on standard book as of Q3FY21
- Rated AAA by CRISIL, ICRA, CARE and India Ratings
New Delhi, January 18, 2021:The Board of L&T Finance Holdings (LTFH), a Non-Banking Financial Company (NBFC), present in lending businesses including Rural, Housing and Infrastructure finance, today announced the financial results for the quarter ended December 31, 2020.
LTFH is a market leader in Farm Equipment finance, and among the top five financiers in Two-Wheeler finance, number three financier in Micro Loans and one of the leading players in financing of Infrastructure sectors like renewables and roads. With a sustainable business model, data analytics led collection and disbursem*nts, and a sharp focus on asset quality, the company remains committed to building a stable and sustainable organization for its consumers and other stakeholders.
Commenting on the financial results Mr. Dinanath Dubhashi, Managing Director & CEO, LTFH, said,“Post Covid, the rural economy has performed better than urban and this trend is reflected in our disbursem*nts, 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 disbursem*nts should be seen alongside the sell-down volumes, which have increased on a YoY basis. It allows us to generate more fee income while proportionately reduces the need for allocating higher capital.”
Key Highlights of Q3FY21:
The quarter saw a strong economic recovery across sectors led by rural and infrastructure. Higher farmer income, positive rural sentiment, combined with the festive season helped maintain market share in farm equipment and two-wheeler finance.
- Disbursem*nts:The company witnessed excellent pick-up in disbursem*nts across businesses and has achieved highest quarterly disbursem*nt since Q1FY20.
- Rural Finance:The quarter witnessed steady QoQ & YoY improvements in disbursem*nts across Farm Equipment Finance and Two-Wheeler Finance.
- Farm Equipment Finance: Disbursem*nts grew at43% QoQ(13% YoY),which was the highest quarterly disbursem*nt since FY17. It witnessed increased business from top dealers on the back of strengthened Trade Advance (TA) proposition
- Two-Wheeler Finance: Disbursem*nt growth was at50% QoQ(10% YoY) and the business continues to see growth momentum
- Micro Loans (ML): Strong pickup in ML disbursem*nts QoQ, up53%,owing to improved collection efficiency. However, disbursem*nts were down19%YoY as focus remained on existing customers
- Housing Finance:
- The Home Loan business which is focused largely on the salaried segment and direct sourcing, witnessed moderate pickup in disbursem*nts. Home loans to the salaried segment constituted94%of Q3FY21 disbursem*nts, standing at approx.93%of Q3FY20 levels
- Real Estate: Continued to be selective in disbursem*nts with focus on providing support to existing projects to ensure project completion
- Infrastructure Finance: Highest quarterly disbursem*nt since Q1FY19. The business continues to maintain strong emphasis on portfolio monitoring and disbursem*nt focus towards existing projects completion.
- Liquidity:Astute treasury management and abundant market liquidity has helped in reducing cost of borrowing, leading to increase in NIMs + Fees to reach7.39%
- Reduction in cost of borrowing by50bpsQoQ (from 8.32% in Q2FY21 to 7.82% in Q3FY21)
- Maintained lower average liquid assets during the quarter
- Prepayment for high cost borrowing and renegotiation of interest rates
AAA rating and strong parentage has helped LTFH bring down the cost of funds this quarter. As of December 2020, the company maintainedRs. 16,442 Crof liquidity including assets in the form of cash, FDs and other liquid investments ofRs. 7,709 Cr
- Highest Credit Ratings:A diversified business presence, strategic importance to L&T, strong resource raising ability and adequate capitalization resulted in LTFH and all its lending subsidiaries’ long-term ratings rated ‘AAA’by all four rating agencies:
- CRISIL– May 2020 and in December 2020
- CARE –October 2020
- India Ratings– September 2020
- ICRA– September 2020
- Balance Sheet:LTFH continues to maintain a strong capital adequacy of21.82%. Furthermore, the ongoing traction in our analytics-based collection efforts augurs well with our objective of building a strong balance sheet.
The Gross Stage 3 assets of the company stood at5.12%in Q3FY21 of its book, showing a reduction of82bpsYoY. The company also strengthened the PCR on Stage 3 assets from57%in Q3FY20 to64%in Q3FY21.
As a prudent measure, LTFH continues to carry the additional provisions ofRs. 1,739 Crin Q3FY21. This is on account of macro prudential provisions, COVID-19 and accelerated Expected Credit Losses (ECL) provisions on Stage 1 & 2 assets, which are over and above the ECL model on GS3 and Stage 1 & 2 assets.
- Focused Lending Book: Within the focused lending book, the Rural Finance book grew by4%YoY, aided by growth in Farm Equipment Finance book by18%,and the Two-Wheeler Finance book by9%. The Home Loan segment grew by3%YoY.
| Rs. Cr | Q3FY20 | Q3FY21 | Book Growth (%) |
| Focused Lending Business | |||
| Rural Finance | 27,594 | 28,828 | 4 |
| Housing Finance | 26,689 | 26,174 | (2) |
| Infrastructure Finance | 39,674 | 41,456 | 4 |
| Total Focused Book | 93,956 | 96,459 | 3 |
| Defocused Businesses | 5,497 | 3,640 | (34) |
| Total Lending Book | 99,453 | 1,00,099 | 1 |
The Average Assets under Management (AAUM) of the Investment Management business stood atRs.68,976 Crin Q3FY21. The AUM for Equity and Fixed Income asset classes as on 31December 2020 stood atRs. 38,906 CrandRs. 22,483 Cr, with a growth of9%and20%,respectively, QoQ basis.
Financial Performance:
LTFH is focused on leveraging the power of data and analytics to build a ‘collection-led disbursem*nt’ model, which, along with economic recovery in the rural segment, has led to a significant improvement in collection efficiency and a strong pickup in disbursem*nts (QoQ). The sentiment continues to remain positive in the rural sector.
The company posted a consolidated PAT ofRs. 291 Crin Q3FY21, a10%increase QoQ, fromRs. 265 Crin Q2FY21
- PAT inQ3FY21saw a51%reduction YoY,fromRs. 591 Cr in Q3FY20
- NIMs + Feesat7.39%(Q3FY21) vs7.29%(Q3FY20), highest ever since FY17
- Reduction inGS3from5.94%to5.12%YoY;NS3reduced from2.67%to1.92%YoY; Increase inPCRfrom57%to64%YoY
- The cost of funds has gone down by nearly50 bpsfor the entire book from8.32%in Q2FY21 to7.82% in Q3FY21
Mr. Dubhashifurther added, “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 Equipment and Two-Wheeler Finance to drive business volumes.”
Corporate Comm India (CCI Newswire)
