Money & Banking

Spike in provisioning drives Edelweiss Financial Services to ₹2,282-crore Q4 loss

Our Bureau Mumbai | Updated on July 05, 2020

Rashesh Shah, Chairman and CEO, Edelweiss Financial Services

Edelweiss Financial Services reported a net loss of ₹2,281.55 crore in the fourth quarter of 2019-20 with a sharp rise in provisions and impairments. The company had a consolidated net profit of ₹246.32 crore in the same period a year ago.

Its board of directors also approved raising of up to ₹1,500 crore of funds through issue of securities including but not limited to equity shares and or any other securities convertible into or exchangeable with equity shares and or Non-Convertible Debentures with or without warrants and or American Depository Receipts and or Global Depository Receipts, through rights issue or further public offer, Qualified Institutions Placement/Preferential Issue or any other permissible mode.

In the quarter ended March 31, 2020, it recorded total impairment of ₹2,549 crore, which was based on revisions in the Expected Credit Loss model and impact of Covid-19.

Total revenue from operations amounted to ₹1,935.40 crore in the January to March 2020 quarter, which was 36 per cent lower compared to ₹3,035.62 crore in the same period a year ago.

“Comfortable liquidity position with liquidity at 24 per cent of the borrowings as on March 31, 2020 at a consolidated EFSL level,” the company said in a statement on July 4.

In 2019-20, its net loss stood at ₹2,043.77 crore as compared to a net profit of ₹1,044.37 crore in 2018-19.

Rashesh Shah, Chairman and CEO, Edelweiss Financial Services, noted that the last eight quarters have been challenging ones for the financial services industry and the slowing economy was further weakened by the Covid-19 crisis.

“In this quarter, we have taken three conscious decisions based on our experience and that of our board: the markdown and sell-down of our corporate asset book, accelerating to capital light model in retail credit, and the proposed equity raise at Edelweiss and in our wealth and asset management business. These measures will further strengthen both our balance sheet and our dominant franchises. As the economy recovers over the next few quarters, our businesses will be well-poised to grow strongly,” he said.

For the current fiscal, the company will focus on active Covid-19 impact management on liquidity and asset quality, equity capital raise of ₹1,500 to ₹2,000 crore and enhancing operational efficiencies through use of technology.

Published on July 05, 2020

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