The Hindu Business Line : Extraordinary income pushes up Geojit net by 74%

Mumbai, Jan. 13 The trend of declining profits for the broking and financial services industry appears to be continuing into the third quarter of the current fiscal too, going by the results of Motilal Oswal Financial Services and Geojit Financial Services.

Kochi-based Geojit Financial Services reported a 74 per cent increase in its consolidated third quarter net profit, at Rs.38.63 crore. But the increase was only because of extraordinary gains amounting to Rs 40 crore.

“This amount was received as compensation from BNP Paribas for discounting the commodity business,” explained Mr C.J. George, Managing Director of Geojit.

Excluding the extraordinary item, Geojit recorded a net consolidated loss of Rs 1.08 crore for the quarter ended December 31, 2008. Its net income dipped 50 per cent to Rs 39.44 crore from Rs 78.66 crore.

“This is on account of a decline in revenues as well as an increase in costs due to the opening of 100 new branches during the last one year which are yet to start making profits. The new branches are yet to break even. The joint venture in Saudi Arabia has started pilot operations and hence the share of expenses from its inception to the tune of Rs 3.7 crore has been consolidated in the third quarter which again had an adverse impact on the profitability,” said Mr George.

He added that the company has put on hold expansion plans.

The company’s standalone net profit dropped 99 per cent to Rs 0.11 crore for the quarter ended December 31 from Rs 18.9 crore in the corresponding year-ago quarter. The total income fell 52 per cent to Rs 34.6 crore (Rs 71.6 crore).

Motilal Oswal

Motilal Oswal Financial Services’ consolidated net profit for the quarter ended December 31, 2008, dropped 62 per cent to Rs 20.4 crore (Rs 53.7 crore). Total revenue fell 59 per cent to 96.2 crore from Rs 235.9 crore.

The company’s broking and operating income, investment banking fees and asset management fees fell by between 34 per cent and 94 per cent.

The company’s’ standalone net profit, however, increased 81 per cent to Rs 8.7 crore (Rs 4.86 crore). Its total revenues went up 24 per cent to Rs 14.4 crore (Rs 11.6 crore). The standalone results are those of only the holding company whose sole business is finance.

The share price of Motilal Oswal increased 1.58 per cent to Rs 67.65 on the BSE on Tuesday.

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