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L&T Finance Holdings Ltd posted a strong loan growth, albeit with notable stress on infrastructure and corporate segments.
L&T Finance Holdings (LTFH), a financial holding company offering a diverse range of financial products and services across the corporate, retail and infrastructure finance sectors, posted a 27 per cent increase in its consolidated net profit for the quarter ending December to Rs 119 crore.
However, on a sequential basis the profit declined 18 per cent due to higher credit costs.
Loans and advances grew 31 per cent year-on-year and 13 per cent quarter-on-quarter. Within this, L&T Infra loan book grew 32 per cent year-on-year, while L&T Finance (including L&T FinCorp) loan assets grew 19 per cent over last year.
Net interest margins (NIMs) for the lending business stood at 5.28 per cent, declining 30 bps on a quarter-on-quarter basis.
Within L&T Finance, NIMs remained stable in spite of increase in gearing levels. However, in the infra business, margins declined 50 bps on account of large disbursements during the end of the quarter.
Lower disbursements
The total disbursements for the nine- month period aggregated to Rs 15,556 crore (previous year: Rs 15,325 crore).
Of this, L&T Infrastructure Finance Company disbursed Rs 4,112 crore (Rs 4,197 crore), L&T Finance (including L&T Fincorp) Rs 11,413 crore (Rs 11,127 crore) and L&T Housing Finance disbursed Rs 31 crore.
The management attributed the slow growth in disbursements to the current environment in the infrastructure sector and corporate sector and their cautious stance on credit selection. Within retail and corporate finance, the growth in disbursements was driven mainly by rural products’ finance segment. Gross NPA stood at 2.39 per cent of gross advances as on December 31, as against 1.81 per cent on September 30. The stress on asset quality was primarily due to infrastructure, corporate and construction equipment segment.
Gross NPA
Within the infrastructure segment, gross NPA increased due to slippage on two additional client accounts. Management expects to see one more quarter of stress.
In the retail and corporate finance segment, credit costs were higher on account of stress in the corporate and construction equipment business.
Going forward, the management expects credit costs to remain stable, and not decline significantly in the near-term.
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