MUMBAI: State-run Power Finance Corporation, the largest non-banking lender with over Rs 12.4 trillion in assets, has reported a marginal 3 per cent increase in the March quarter consolidated net income at Rs 8,598 crore, weighed down by a fall in interest income as borrowers chose to prepay their dues.
It came amid low interest rates coupled with forex reverses due to the rupee fall.
For the full fiscal, the company posted a consolidated net of Rs 33,625 crore, up 10 per cent on-year.
When asked about the impact of the new RBI draft on large NBFCs, chairman and managing director Parminder Chopra on Wednesday told reporters that the company is concerned about the new draft that caps the single group exposure to 35 per cent from the present 50 per cent, pointing out that a couple of groups will be higher than the proposed ask.
Commenting on the government announcement of merging REC with PFC, Chopra said the move will create a financial institution of significant scale and strategic relevance.
"PFC already owns 62.60 per cent in REC since 2019, and post-merger, the combined entity will remain a state-owned company," she said.
Bottomline growth was capped at 3 per cent as the core net interest income fell 11 per cent to Rs 10,833 crore during the quarter, due to a narrowing of the net interest margin to 3.55 per cent in FY26 and a 7 per cent growth in the loan book, taking the overall assets under management to close to Rs 5.65 trillion on a standalone basis.
Chopra explained that a lowering of interest rates scenario like the one seen last fiscal year leads to prepayments, and added that the loan book would have been higher at nearly 11 per cent if not for the prepayments by borrowers.
Accordingly, the loan book grew only 7 per cent against the guidance of 10 per cent, and she, however, chose to maintain the 10-11 per cent loan growth this fiscal as she does not expect any more rate cuts by the Reserve Bank this fiscal.
PFC is aiming to borrow Rs 1.6 trillion in FY27 to fund the loan growth, she said, adding, however, it has not decided on the break-up between domestic and foreign sources of funds, given the ongoing geopolitical volatilities.
"Power distribution companies, thermal power projects, expansion in nuclear power capacity and infrastructure sectors are the pockets witnessing higher demand," she said.
The company does not see any stress in loan repayments because of the West Asia crisis, but the rupee depreciation has extracted a cost, Chopra said, adding it led to a mark-to-market loss of Rs 1,500 crore in FY26.
A provision reversal of Rs 1,800 crore from money set aside against stressed projects, which were subsequently resolved, helped the overall profit, she said.
"The company made an additional Rs 1,000 crore provisions under the expected credit loss framework", she said.
