Money & Banking

Rising bad loans drag down MMFSL Q1 net 19%

Satyanarayan Iyer Mumbai | Updated on November 25, 2017

Performance impacted by lower collection efficiency

Mahindra and Mahindra Financial Services Limited (MMFSL) said that its first quarter net profit decreased by 19 per cent to ₹155 crore, hurt by higher finance costs and increased write-offs on its loans during the quarter.

In the year ago quarter, the Mumbai-based non-banking finance company had posted a net profit of ₹191 crore.

Collection efficiency

“The results were impacted by lower collection efficiency in April and May because of reduced number of effective working days. The announcement of expected low monsoon also had a negative impact,” the company said in a statement.

Companies like MMFSL rely heavily on their ground staff for collections.

According to sources, staff of non-banking finance companies now have to make more visits to a customer location to collect their dues than before.

In the reporting quarter, the non-banking finance company’s gross non-performing assets grew to ₹2,030 crore, against ₹1,410 crore in the previous quarter (ended March 2014).

Positive on improvemnt

This is equivalent to 6.2 per cent of the company’s total loans. The financier, however, was optimistic about an improvement in the economic environment.

“The outlook for the year got a small boost with the month of June witnessing an improvement (in economic environment) over the previous two months of the quarter,” it said.

The Mumbai-based financial services company’s total income grew 17 per cent to ₹1,384 crore.

Finance costs during the April to June period jumped 25 per cent to ₹595 crore.

Provisions towards bad loans and write-offs put together were higher at ₹225 crore during the quarter (₹125 crore, a year ago).

Shares of MMFSL closed at ₹249.90 per share, down 2.52 per cent on the BSE.

Published on July 24, 2014

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