MUMBAI: The second largest non-bank lender Shriram Finance, which last month made history by bringing in the largest FDI into the domestic financial services sector getting $4.4 billion from MUFG Bank of Japan for a 20% stake, has reported a steep 29% year-on-year fall in net profit to Rs 2,522 crore. In the same quarter in the last fiscal, it had a net profit of Rs 3,570 crore.
Excluding the one-time income of Rs 1,489.4 crore from the sale of a stake in its housing finance subsidiary last year, the company’s net income rose 21% on-year, the company said Friday, adding pair tax profit rose 9% on a sequential basis from Rs 2,307 crore.
Shriram Finance's net interest income increased 16.6% to Rs 6,764 crore compared to Rs 5,823 crore in the corresponding quarter of the last financial year. The company incurred expenses of Rs 8,831 crore, marginally up from Rs 8,807 crore sequentially and 11% higher from Rs 7,946 crore in the year ago period. The expenses were made towards finance cost, fees & commissions, impairment on financial instruments and employee benefits among other things.
The numbers were bolstered by growth in lending for commercial and passenger vehicle purchases and loans to small enterprises. The street was expecting the lender to book only Rs 2,415 crore in net income.
This was Shriram Finance's first earnings report after Japan's largest bank MUFG agreed to buy a 20% stake in the company for $4.4 billion in late December. Analysts said the equity infusion would reduce the cost of funds for the non-bank lender and help increase its loan book in the next few years.
Loans overdue by more than 90 days declined 2.96% to Rs 13,121 crore. The net interest margin rose to 8.58% from 8.19% in the previous quarter.
Loans for commercial vehicles, Shriram Finance's biggest segment, rose 15%, while loans to medium and small businesses grew by 18.61% on-year. Lending for passenger vehicles and two-wheelers climbed about 21.84% and 12.73%, respectively. The four segments account for over 87% of its assets under management, which rose 14.63% to Rs 2.917 trillion.
Analysts at Centrum Broking said that auto sale volumes remained strong in this period. Festive season economic activity was robust, aided by a good monsoon, which boosted commercial vehicle sales, they added.